October 23, 2017 / 10:26 AM / 3 years ago

METALS-Zinc gains as Chinese output falters ahead of winter shutdowns

(Updates with closing prices)

By Eric Onstad

LONDON, Oct 23 (Reuters) - Zinc prices rose on Monday after data showed output in China slipped in September, highlighting worries that winter production cuts are tightening supplies of metals.

Data on Monday showed zinc production fell 2.7 percent last month to 537,000 tonnes after numbers last week showed aluminium output dropped 5.6 percent to 2.6 million tonnes, its lowest since April 2016.

“It could be that the winter production cuts are already having an impact. I do see this as a factor supporting prices for the remainder of the year,” said Caroline Bain, chief commodities economist at Capital Economics in London.

Metals rose across the board on the London Metal Exchange, still basking in the glow of last week’s firm growth data in China, the world’s biggest metals consumer.

“I think it’s a continuation of the positive sentiment from last week,” Bain said.

That data showed the world’s second-largest economy grew at 6.8 percent in the third quarter and remained on track to post the first full-year pickup in seven years.

The head of the state planning agency said on Saturday that China’s economy was on track to meet its official growth target for 2017 despite a punishing war on pollution.

* ZINC: Benchmark LME zinc closed up 0.9 percent at $3,129 a tonne after dipping 0.5 percent on Friday.

* ZINC SPREADS: The premium of cash zinc over three-month zinc CMZN0-3 remained elevated at $57 a tonne, showing near-term supply was still limited. It was down from a peak of $91 on Oct. 12 but still much higher than the peak for the year before mid-September of $11.

Traders say the high premiums are linked to one party continuing to hold a large position — more than 90 percent of available inventories and short-term futures. <0#LME-WHT>

* ZINC MINES: Chinese zinc mine output has been impacted more than copper due to the small-scale of zinc mines, said analyst Natasha Kaneva at JPMorgan. “This year, throughout August, nearly 60 percent of Sichuan province’s zinc concentrate production ... was reportedly shuttered during the last round of inspections,” she said in a note.

* COPPER: Three-month copper finished 0.8 percent firmer at $7,004 a tonne, despite data showing Chinese refined copper output rose 6.8 percent in September to its highest since December 2014.

Copper has retreated from a three-year peak of $7,177 hit last week, when it posted its fourth straight weekly gain.

* NICKEL: LME nickel ended 1.1 percent higher at $11,860 a tonne, bolstered by gains in Chinese steel prices.

* PRICES: Aluminium added 0.1 percent to close at $2,137, lead climbed 1.2 percent to $2,500 and tin inched up 0.02 percent to $19,580.

Additional reporting by Melanie Burton in Melbourne; Editing by David Evans and Edmund Blair

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