May 22, 2017 / 6:37 AM / 3 years ago

METALS-China pollution crackdown lifts steel ingredients zinc, nickel

 (Updates prices)
    By Melanie Burton
    MELBOURNE, May 22 (Reuters) - Shanghai zinc and nickel
surged on Monday on the back of a sustained crackdown in China's
polluting steel industry, which fuelled worries about supply of
the construction material and lifted prices of its raw
materials. 
    Both metals were jolted out of a downtrend that last week
saw them touch their lowest for the year amid concerns about a
slowdown in China's metals demand. The rally in steel prices
also caught short-holders by surprise and forced them to cover
their positions. 
    "It's all very macro-driven at the moment," said analyst
Daniel Morgan at UBS in Sydney.
    He said that the metals market, including steel, was
overheated in the first quarter given strong growth in top
consumer China, but the country's recent shift towards credit
tightening had pushed the sector to overcorrect. 
    "When it's all done and dusted, I think this year will have
been a reasonable year for commodities."
    
    FUNDAMENTALS
    * ZINC: Shanghai Futures Exchange zinc surged more
than 5 percent before paring gains to 22,195 yuan ($3,221),
still up 4.2 percent. London Metal Exchange zinc also
cut gains to half a percent at $2,631.50, having earlier struck
its highest in two weeks at $2,667, the most expensive since May
2. 
    * NICKEL: SHFE nickel jumped 2.4 percent, while LME
nickel was off earlier highs, but still up 0.3 percent. 
    * CHINA POLLUTION: China's Tangshan city launched a campaign
to improve air quality last week, saying steel mills in the
country's top producing region that fail to meet emission
standards face suspension and heavy fines.
    * CHINA PROPERTY: China issued a draft of new rules for
property sales and leasing on Friday to improve management and
operation in a part of the services sector that is often poorly
regulated.
    * COPPER: LME copper had edged down 0.3 percent to
$5,667.50 a tonne by 0711 GMT, having hit the highest since
early May at $5,694.50 on Friday. The ShFE copper
contract was up 1.5 percent at 45,800 yuan ($6,646) a tonne.
    * CHINA ECONOMY: China's economy will likely expand around
6.8 percent in the second quarter of 2017, the State Information
Center said in an article published in the state-owned China
Securities Journal on Saturday.
    * FREEPORT: An estimated 9,000 workers at the giant Grasberg
copper mine operated by the Indonesian unit of Freeport McMoRan
Inc will extend a strike for a second month, a union
official said on Saturday, in an ongoing dispute over employment
terms and layoffs.
    PRICES    
    
 BASE METALS PRICES                                    
 Three month LME copper                          5667.5
 Most active ShFE copper                          45790
 Three month LME aluminium                       1935.5
 Most active ShFE aluminium                       13985
 Three month LME zinc                              2631
 Most active ShFE zinc                            22195
 Three month LME lead                            2112.5
 Most active ShFE lead                            15730
 Three month LME nickel                            9385
 Most active ShFE nickel                          77850
 Three month LME tin                              20365
 Most active ShFE tin                            145050
                                                       
 BASE METALS ARBITRAGE                                 
 LME/SHFE COPPER                LMESHFCUc3       167.57
 LME/SHFE ALUMINIUM             LMESHFALc3     -1549.23
 LME/SHFE ZINC                  LMESHFZNc3        336.8
 LME/SHFE LEAD                  LMESHFPBc3     -1644.68
 LME/SHFE NICKEL                LMESHFNIc3      1220.29
 


($1 = 6.8830 Chinese yuan renminbi)



($1 = 6.8910 Chinese yuan renminbi)

    
 (Reporting by Melanie Burton; Editing by Richard Pullin and
Joseph Radford)
  
 
 
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