×

METALS-LME aluminium teeters near 3-mth trough on China smelter ramp up

(Adds comment, updates prices) MELBOURNE, March 15 (Reuters) - London aluminium hovered near its lowest since late December on Thursday on expectations of rising supply as China's winter pollution controls expire. More generally, metals came under light pressure amid mounting investor concerns that growing trade tensions would hurt the global economy.

FUNDAMENTALS

* ALUMINIUM: London Metal Exchange aluminium crept up 0.2 percent to $2,094 a tonne by 0550 GMT, having slipped to the weakest since Dec. 19 at $2,087 on Wednesday. Support is seen at the 200 moving day average at $2,083, a break of which could trigger a steeper correction, as it would send a sell signal to momentum following funds.

* SHFE: Shanghai aluminium hit its lowest in 14 months at 13,820 yuan ($2,191) on Tuesday and last traded at 13,950 yuan.

* SMOG: The winter heating season ended on Thursday. Aluminium smelters in 28 northern Chinese cities had been told to reduce output by at least 30 percent from Nov. 15 to March 15, although the actual volume cut was below expectations, putting pressure on prices.

* OUTPUT: China's aluminium production fell 1.8 percent in January-February from a year earlier, as the country's pollution crackdown and supply-side reform kicked in. An estimated 4.4 million tonnes of new capacity are expected to be completed this year

* "Although the NBS figures show that aluminium production decreased year-on-year ... it reached over 90,000 tons on a daily basis the highest level since last June," noted Commerzbank. "Stocks of both steel and aluminium have grown noticeably so far this year, which points to subdued demand and could give rise to concerns about excessive supply."

* STOCKS: Shfe aluminium <AL-STX-SGH> stockpiles held at exchange warehouses are within a whisker of record highs near 850,000 tonnes, reflecting a surplus of domestic material.

* DISCOUNT: The discount between cash Shfe and physical prices <AL-A00-CCNMM> has narrowed to 35 yuan from 385 three weeks ago, reflecting a tightening market and an expected pick-up in nearby demand.

* COPPER: LME copper slipped 0.4 percent to $6960 a tonne, paring previous session's gains. Prices are expected to rise as industrial production in the seasonally strongest second quarter ramps up.

* TRADE: The Trump administration is pressing China to cut its trade surplus with the United States by $100 billion.

* COBALT: Glencore, the world's biggest producer of cobalt, has agreed to sell around a third of its cobalt production over the next three years to Chinese battery recycler GEM.

* SMOG: Eastern China's Jiangsu province will step up its war on pollution and focus on "high-quality development" following a spike in smog early this year.

* DOLLAR: Supporting metals, the dollar fell against the yen on Thursday as lingering worries about global trade tensions weighed on investors' risk appetite.

PRICES

BASE METALS PRICES 0553 GMT Three month LME copper 6960.5 Most active ShFE copper 52040 Three month LME aluminium 2094.5 Most active ShFE aluminium 13970 Three month LME zinc 3219.5 Most active ShFE zinc 24740 Three month LME lead 2393.5 Most active ShFE lead 18485 Three month LME nickel 13710 Most active ShFE nickel 103290 Three month LME tin 21200 Most active ShFE tin 144810

BASE METALS ARBITRAGE

LME/SHFE COPPER LMESHFCUc3 912.84 LME/SHFE ALUMINIUM LMESHFALc3 -1374.4 LME/SHFE ZINC LMESHFZNc3 627.55 LME/SHFE LEAD LMESHFPBc3 124.2 LME/SHFE NICKEL LMESHFNIc3 1291.25

($1 = 6.3075 Chinese yuan renminbi)

(Reporting by Melanie Burton; editing by Richard Pullin and Vyas Mohan)