October 12, 2015 / 7:59 AM / in 5 years

METALS-London copper gains, zinc rallies as supply cuts in focus

* Glencore cuts create zinc price risk in coming months

* Rio Tinto doesn’t see further copper output cuts

* LME week begins in London this week.

* U.S. Columbus Day holiday; commodity markets open (Adds detail, updates prices)

By Melanie Burton

MELBOURNE, Oct 12 (Reuters) - London copper climbed on Monday to near its highest level in more than three weeks, after production cuts by Glencore revived sentiment towards metals and as a U.S. rate hike looked to be delayed.

Weak commodities prices prompted Glencore to cut 500,000 tonnes of zinc production, or 4 percent of global supply on Friday, a move that sent zinc prices rallying about 10 percent.

“Glencore is shoring up its balance sheet by cutting supply. It’s not the amount, it’s the message of what it is prepared to do,” said chief investment officer Jonathan Barratt of Ayer’s Alliance in Sydney.

“The message of the miners cutting supply, that China can stimulate and continue to stimulate is (why) for the last month we’ve been saying this is where you start your long positions.”

Three-month copper on the London Metal Exchange climbed by 1 percent to $5,345 a tonne by 0745 GMT, adding to gains of 3 percent in the previous session.

LME zinc rallied 2.3 percent to $1,878.50 a tonne. LME zinc rocketed 10 percent on Friday in its largest single-day gain in a decade. Shanghai zinc ended up 4.3 percent.

“The scale of Glencore’s announced cuts here creates upside risk for zinc’s price in coming months,” said Morgan Stanley in a note, adding the story was not the same for lead.

“The flipside, 100,000 tonnes per annum for lead doesn’t pose a similar risk for lead’s price (so) no change.”

Shanghai Futures Exchange copper climbed 1.4 percent, with similar gains seen in lead, aluminium, while ShFE nickel rallied 2.3 percent.

Mining group Rio Tinto has no plans to join rival Glencore in cutting copper output next year to boost prices, having already reduced production at its U.S. operations this year, an executive said.

U.S. Federal Reserve policymakers are still likely to raise interest rates this year but that is ‘an expectation, not a commitment’, and could change if the global economy pushes the U.S. economy further off course, Federal Reserve Vice Chairman Stanley Fischer said.

Metals stocks were also supported by expectations of more stimulus from China, at its plenum later this month. Beijing will publish September trade data on Tuesday and inflation on Wednesday and any significant deviation from expectations could set the tone for the week.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

Reporting by Melanie Burton; Editing by Michael Perry and Biju Dwarakanath

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