March 5, 2018 / 10:55 AM / 2 years ago

METALS-Zinc hits 2018 low as stocks jump, U.S. tariffs loom

* LME/ShFE arb:

* GRAPHIC-2018 asset returns: (Updates with closing prices)

By Jan Harvey

LONDON, March 5 (Reuters) - Zinc slid to its lowest this year on Monday, falling for a fifth consecutive session as inventories surged and concerns about proposed U.S. trade tariffs weighed on metals used in steel manufacturing.

Zinc, which is used to galvanise steel, has fallen nearly 8 percent since peaking last month at $3,595.50 a tonne, its highest in more than a decade.

The metal came under pressure last week, along with aluminium and fellow steel component nickel, after U.S. President Donald Trump announced plans to impose hefty tariffs on imported steel and aluminium to protect U.S. producers.

“It has always been our view that zinc prices would fall back quite sharply this year, regardless of what happened with steel, which is obviously a concern,” said Capital Economics analyst Caroline Bain.

“It has had the most phenomenal rally and there was always scope for it to eke back. On the fundamental level we think mine supply grew strongly last year and we see more of that this year, so we see the market tightness easing.”

* ZINC PRICES: London Metal Exchange zinc closed 1.8 percent down at $3,296 a tonne, having slid 4.2 percent last week in its biggest weekly retreaty in three months. Zinc earlier hit its lowest since Dec. 28 at $3,273.50.

* ZINC INVENTORIES: Stocks of zinc in London Metal Exchange warehouses MZN-STOCKS jumped by 59 percent on Monday to 209,050 tonnes, while on-warrant levels nearly doubled to 162,825 tonnes.

* NICKEL AND ALUMINIUM: Other metals potentially affected by mooted tariffs were also under pressure. Nickel ended the day 0.1 percent lower at $13,430 a tonne while aluminium finished 0.2 percent down at $2,145.

* ALUMINIUM: Some Chinese aluminium producers that shut smelters during a winter crackdown on pollution may not reopen this spring once output curbs are lifted.

* CURVE: LME aluminium spreads showed easing in supply tightness mid-year when more China production is expected to come online. CMAL0-3 CMALT-0

* COPPER: LME copper closed 0.2 percent up at $6,910 a tonne. Prices are expected to recover as manufacturing demand cranks up into the seasonally strong second quarter.

* CHINA ECONOMY: China aims to expand its economy by about 6.5 percent this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said on Monday.

* COPPER: Hedge funds and money managers cut their net long positions in COMEX gold and copper contracts in the week to Feb. 27, U.S. Commodity Futures Trading Commission data showed on Friday.

* OTHER METALS: LME lead ended 0.9 percent down at $2,425 a tonne while tin finished with a 0.3 percent gain at $21,550.

Reporting by Jan Harvey; additional reporting by Melanie Burton in Melbourne; Editing by Dale Hudson and David Goodman

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