April 4, 2017 / 10:35 AM / 3 years ago

METALS-Zinc rebounds from three-week low on expectations for China demand

* LME/ShFE arbitrage: tmsnrt.rs/2oQ5nm2

* Wide LME zinc contango shows well-supplied market

* Aluminium biggest speculative long on LME - Marex (Updates with closing prices)

By Eric Onstad

LONDON, April 4 (Reuters) - Zinc prices bounced after touching a three-week low on Tuesday as investors bet lacklustre demand would recover in top metals consumer China, while copper hit a one-week low.

“We remain in a holding pattern across the complex, largely tied to how on-shore (Chinese) demand conditions are going to evolve over the next month or two. That’s really the key to the outlook,” said Nicholas Snowdon, metals analyst at Standard Chartered in London.

“The physical markets for the majority of the metals at a refined level remain very soft and the longer we go on without Chinese demand picking up, the more pressure there will be on prices,” he added.

“We still think the zinc refined market will tighten up in the second quarter.”

* ZINC: Benchmark London Metal Exchange zinc closed up 1 percent at $2,736, recovering from a low of $2,702, the weakest since March 14, and after falling 2.2 percent on Monday.

* ZINC SPREAD: A widening of LME zinc spreads indicated adequate supply of refined metal in the market. The discount of LME cash zinc to the three-month contract CMZN0-3 moved to $27 a tonne, the biggest discount since October 2015.

* SHFE: The Shanghai Futures Exchange was closed for a public holiday and will reopen on Wednesday.

* COPPER: LME copper ended 0.4 percent higher at $5,778, after slipping to its lowest since March 27 at $5,730. On Monday, it broke below the 100-day moving average at $5,785, and ended with a 1.5 percent loss.

* ESCONDIDA: Escondida, the world’s biggest copper mine, has restarted production but is still some way from a return to full capacity after a strike that ended in late March, a senior executive from mine owner BHP Billiton, said.

* ANTOFAGASTA: The world’s copper market could see a small shortage this year, but the price outlook is uncertain, as risk factors include the possibility of protectionist policy from the United States, the head of miner Antofagasta said.

* ALUMINIUM: The LME price closed down 0.8 percent at $1,937. Alastair Munro at broker Marex Spectron said it had the biggest speculative long of the complex at 41 percent of open interest, close to the multi-year high of 43 percent. LME stocks MALSTX-TOTAL fell 14,250 tonnes to the lowest since December 2008.

* ALUMINIUM TECHNICALS: Consolidation expected this week, but later aluminium is likely to target $2,000, said Commerzbank technical analyst Axel Rudolph in a note. “We will retain our short-term bullish forecast while no drop below the March low at $1,848 is seen.”

* PRICES: Lead ended 1 percent higher at $2,309, nickel gained 1.3 percent to $9,980 and tin dipped 0.1 percent to $20,025.

Reporting by Eric Onstad, editing by Dale Hudson and David Evans

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