October 9, 2017 / 6:27 AM / in 10 days

METALS-Shanghai zinc hits 9-1/2-year high on supply stress

 (Updates prices)
    By Melanie Burton
    MELBOURNE, Oct 9 (Reuters) - Shanghai zinc surged 4 percent
to its highest in nearly a decade on Monday, lifted by supply
concerns as well as expectations for improved liquidity in
markets in China, the world's top metals consumer.
    Returning from a week of holidays, markets broadly welcomed
a move by China's central bank to lower reserve rate
requirements for some banks that meet certain requirements for
lending to small business.
    "Overall the (metals) complex has held up well," Marex
Spectron's head of Asian institutional sales Matt France wrote
in a report.
    France said if a rally in steel prices reversed later in the
day, it could drag down metals. Zinc and nickel in particular,
inputs to the galvanized and stainless steel sectors, tend to
track steel prices. 
    "But overall it does feel like the structure is intact so
bigger dips should be (bought) for now."
    
    FUNDAMENTALS
    * SHFE ZINC: Shanghai Futures Exchange zinc rallied by 4
percent to hit its most expensive since March 2008 at 26,935
yuan ($4,048) a tonne before paring gains to 3.4 pct by 0554 GMT
 
    * ZINC SUPPLY: Concerns about dwindling supply have lit a
fire under prices as the closure of several giant mines in
recent years has crimped production of refined metal. In China,
Shfe zinc stocks are the lowest since early 2009, just under
65,000 tonnes. ZN-STX-SGH
    * LME ZINC: On the London Metal Exchange, zinc prices
climbed by 0.9 percent to $3,264 a tonne. LME prices, which have
climbed by 27 percent so this year, last week hit $3,308.75 
which was the loftiest since 2007.  
    * LME zinc cash to three month spreads are also showing the
most stress in a decade, with LME cash prices more than $65
above the benchmark contract several times in the past month.
CMZN0-3
    * COPPER: Elsewhere, LME copper edged up by 0.1
percent to $6,671 a tonne, while SHFE copper rose by
1.7 percent to 52,110 yuan ($7,855) a tonne. LME nickel
rose by 1.7 percent alongside higher prices for steel while Shfe
nickel rallied 3.3 pct. 
    * CHINA PMI: Activity in China's services sector grew at its
slowest pace in 21 months in September as the pace of new
business cooled, a private survey showed.
    * HOLIDAYS: Columbus Day in the U.S. and a public holiday in
Japan thinned out trading volumes even as Chinese markets
reopened. 
    * INVESTORS: Hedge funds and money managers reduced their
net long positions in COMEX copper futures and options for the
fourth straight week, in the week to Oct. 3, U.S. Commodity
Futures Trading Commission data showed on Friday.      
     
 BASE METALS PRICES                0701 GMT            
 Three month LME copper                            6674
 Most active ShFE copper                          52100
 Three month LME aluminium                       2154.5
 Most active ShFE aluminium                       16565
 Three month LME zinc                              3264
 Most active ShFE zinc                            26720
 Three month LME lead                              2529
 Most active ShFE lead                            21155
 Three month LME nickel                           10780
 Most active ShFE nickel                          87290
 Three month LME tin                              20860
 Most active ShFE tin                            148200
                                                       
 BASE METALS ARBITRAGE                                 
 LME/SHFE COPPER                 LMESHFCUc3      277.38
 LME/SHFE ALUMINIUM              LMESHFALc3       23.84
                                             
 LME/SHFE ZINC                   LMESHFZNc3      616.96
 LME/SHFE LEAD                   LMESHFPBc3      159.56
 LME/SHFE NICKEL                 LMESHFNIc3     2562.72
                                             
 
    
 (Reporting by Melanie Burton; Editing by Kenneth Maxwell and
Amrutha Gayathri)
  
 
 

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