March 13, 2018 / 12:32 PM / in 2 years

METALS-Aluminium supported as China seen sustaining supply cuts

* LME/ShFE arb:

* GRAPHIC-2018 asset returns: (Adds closing prices, India steel, technicals)

By Zandi Shabalala

LONDON, March 13 (Reuters) - Aluminium prices inched higher on Tuesday on speculation China may sustain supply cuts after winter production curbs expire in two days.

Benchmark aluminium on the London Metal Exchange ended 0.6 percent higher at $2,103 per tonne, after touching a Dec. 19 low of $2,087.50.

The metal, used in stainless steel, fell 1.4 percent in the previous session as the market prepared for the winter cuts to be lifted.

China ordered smelters in 28 northern cities to cut aluminium output by at least 30 percent from mid-November to mid-March as part of an anti-pollution campaign.

“If China was able to extend the supply cuts over and beyond what has already been idled in the winter ... aluminium could have some upside,” said ETF Securities commodities strategist Nitesh Shah.

“But there is always the risk of slipping into the status quo because China is too scared to allow the stakeholders to be financially degraded by these moves.”

SUPPLY: China’s top steelmaking city of Tangshan will order some steel mills to cut production by as much as half to improve air quality, after curbs put in place during winter expire in March, the government said on Tuesday.

ALI SPREADS: The discount of LME cash aluminium to the three-month contract CMAL0-3 moved to $22 a tonne, the biggest discount in nearly five-months. This could encourage deliveries into LME warehouses and takes pressure of prices.

TARIFFS: President Donald Trump said this month he would impose tariffs of 10 percent on aluminium imports and 25 percent on steel imports into the United States, sparking fears of a global trade war as he risks retaliation from the likes of China, Europe and Canada.

TECHNICALS: LME aluminium is finding support near the 200-day moving average, said Natixis analyst Cameron Karami.

ShFE ALUMINIUM: The most traded May aluminium contract on the Shanghai Futures Exchange (ShFE) touched its lowest since Dec. 2016.

ShFE STOCKS: Inventories in Shanghai reached a fresh record high of 846,913 tonnes, putting pressure on prices. AL-STX-SGH

INDIA: India’s ambition to become a major steel exporter could be disrupted by U.S. import curbs, Steel Minister Chaudhary Birender Singh said, underscoring the need for free trade.

LEAD STOCKS: On-warrant lead inventories available to the market at LME-registered warehouses fell to 92,025 tonnes after 8,000 tonnes of cancellations, pushing prices higher. MPBSTX-TOTAL

PRICES: LME lead rose 2 percent to $2,390 per tonne, copper finished 0.5 percent higher at $6,945, tin fell 1 percent to $21,160, zinc rose 1.4 percent to $3,286 and nickel added 1.5 percent to $13,875.

Additional reporting by Tom Daly in BEIJING; Editing by Louise Heavens and Mark Potter

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