May 21, 2019 / 11:32 AM / 9 months ago

METALS-Aluminium and other metals muted as U.S. loosens Huawei restrictions

* GRAPHIC-2019 asset returns: (Adds closing prices, updates with price increase, Peru block)

By Zandi Shabalala

LONDON, May 21 (Reuters) - Aluminium ended barely changed on Tuesday after a day of choppy trade, as a boost from a temporary easing of U.S. trade restrictions on China’s Huawei was offset by expected higher output from Norsk Hydro’s Alunorte refinery.

Washington had previously added Huawei Technologies to an export blacklist that makes it nearly impossible for the Chinese company to purchase goods made in the United States, escalating Sino-U.S. trade tensions, weighing on metal prices.

Trade friction generally weighs on industrial metals and any sign that it is dying down will get some investors interested again, said BMO Capital Markets analyst Colin Hamilton.

Meanwhile, Norsk Hydro’s Alunorte alumina plant could reach 75-85% utilisation within two months, up from about 50% at present, the Norwegian company said.

3333The plant has been operating at half capacity since a spill in February 2018 prompted regulators and courts to curb output.

UBS analysts said the Alunorte restart was largely priced in to the alumina market but aluminium would remain under pressure from soft demand and less stringent supply reform in top producer China.

Benchmark aluminium on the London Metal Exchange (LME) ended barely changed at $1,796 a tonne after falling as low $1,784.50, the lowest since May 9.

“There is not going to be an immediate restart to the facility ... we are quite a while away from it coming back fully,” said BMO analyst Kash Kamal.

MARKET BALANCE: Global primary aluminium output fell to 5.203 million tonnes in April from revised 5.379 million tonnes in March, data from the International Aluminium Institute showed.

ALUMINA: Wood Mackenzie raised its global market balance for alumina by 100,000 tonnes to 1.2 million tonnes as the increase in Alunorte’s production was offset by curtailments in China, analyst Ami Shivkar said.

CHINA STOCKS: Stocks of aluminium in warehouses certified by the Shanghai Futures Exchange (ShFE) fell to their lowest since Oct. 2017 at 569,131 tonnes, data showed on Friday. AL-STX-SGH

In LME warehouses, on-warrant inventories available to the market fell 700 tonnes to 752,100. MALSTX-TOTAL

SPREADS: The premium for LME cash zinc over the three-month contract CMZN0-3 stood at $147.50 a tonne, not far from a 22-year high of $151 last week.

In nickel, the cash premium against the three-month contract CMNI0-3 has virtually disappeared after touching a 2017 high of $20 last week.

PERU COPPER: An indigenous Peruvian community imposed a new road blockade on MMG Ltd’s Las Bambas mine after talks with the mining company broke down over compensation, a representative of the public ombudsman office said.

OTHER METALS: Copper finished 0.6% lower at $5,996 a tonne, zinc was flat at $2,577, lead inched up 0.1% at $1,806, tin was unchanged at $19,450 and nickel gained 0.7% to $12,060.

Additional reporting by Tom Daly in BEIJING Editing by David Goodman and David Evans

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