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METALS-Lead slips to 3-week low as Chinese production rises

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(Updates with closing prices) By Peter Hobson LONDON, Nov 6 (Reuters) - Lead prices fell on Wednesday as rising stockpiles in China and falling premiums for nearby material on the London Metal Exchange (LME) pointed to a better supplied market.

Benchmark lead on the LME closed down 1.8% at $2,115 a tonne after touching $2,101, the lowest since Oct. 3.

A deficit and dwindling stockpiles had pushed the price of the metal - which is used in batteries - to a 15-month high of $2,265.15 last month.

But recycled output is rising in China, the biggest producer, and demand is weak with a U.S.-China trade war slowing economic growth, said CRU analyst Dina Yu.

The most traded lead contract on the Shanghai Futures Exchange <ShFE) has tumbled to its lowest since July. That is pulling down LME prices, said ING analyst Wenyu Yao, predicting that prices will average $1,965 a tonne next year.

STOCKS: Lead inventories in ShFE warehouses have ticked up to 21,411 tonnes from around 15,500 a month ago. Headline stockpiles in LME-registered warehouses at 70,000 tonnes are also up from 10-year lows around 55,000 tonnes in July. SPREAD: The premium for cash lead over the three-month contract on the LME has fallen to $2 from around $20 a week ago, suggesting the market for nearby metal has loosened. WARRANTS: However, one entity holds more than 90% of LME lead warrants, raising concerns over availability. LEAD FUNDAMENTALS: The roughly 12-million tonne global lead market will switch to a 55,000-tonne surplus in 2020 from a deficit of 46,000 tonnes this year, the International Lead and Zinc Study Group (ILZSG) said last week. TRADE WAR: The United States and China are working to narrow their differences enough to sign a "phase one" trade deal as early as this month. EUROPE ECONOMY: German industrial orders and euro zone business activity performed slightly better than expected, but the outlook remains poor. CHINA SCRAP: China issued a sixth batch of quotas for imports of restricted types of scrap metal, including for 11,110 tonnes of high-grade copper scrap. ALUMINIUM: Benchmark aluminium ended flat at $1,810 a tonne as the cash LME contract flipped to a premium against three-month metal for the first time since January 2018, indicating tighter nearby supply. NICKEL: Indonesia may decide on Thursday whether to allow a resumption of nickel ore exports ahead of a ban to come into force in January, a mining ministry official said. The ban will sharply reduce China's output of nickel pig iron (NPI) and have a knock-on effect on stainless steel production, analysts said on Wednesday. OTHER METALS: LME copper finished down 0.6% at $5,907 a tonne, zinc fell 0.9% to $2,475, tin gained 0.7% to $16,565 and nickel closed 0.2% lower at $16,245.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Supply hits push lead and zinc surpluses into 2020 Shanghai lead prices nears 4-month low as China stocks rise ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Peter Hobson, additional reporting by Mai Nguyen; Editing by Emelia Sithole-Matarise/Mark Heinrich/Susan Fenton)

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