Wires

METALS-Zinc hits 9-month peak on hopes for U.S.-China deal, shortages

Eric Onstad
WATCH LIVE

* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl (Recasts, updates with official prices)

LONDON, March 29 (Reuters) - Zinc hit a nine-month peak and other industrial metals also gained on Friday, lifted by optimism about a U.S.-China trade deal and potential shortages due to low stocks and mine disruptions.

U.S. Treasury Secretary Steven Mnuchin said he held "constructive" talks in Beijing aimed at resolving the bitter trade dispute between the world's two largest economies.

Zinc prices have rebounded 24 percent from a low hit in early January, boosted by hopes for a trade deal.

"If they can make further progress, it removes one of the headwinds to further rallies given that the fundamentals are still pretty sound," said Robin Bhar, head of metals research at Societe Generale in London.

"Inventories are falling, and they are critically low in zinc and nickel, while there are supply constraints in copper and zinc."

Three-month zinc on the London Metal Exchange traded 1.7 percent higher at $2,915 a tonne in official open outcry activity, the highest since June 28 last year.

* COPPER: LME copper failed to trade in official rings and was bid 1.8 percent higher at $6,476 a tonne, the biggest one-day gain since Jan. 25. Copper was also headed for its first quarterly gain since the end of 2017.

* COPPER IN PERU: Protests at Las Bambas in Peru, one of the country's largest copper producers. showed no sign of abating, days after the mine operator MMG, warned it could declare force majeure on contracts.

* LME STOCKS: Stockpiles of zinc in LME-registered warehouses <MZNSTX-TOTAL> hit fresh lows since at least 1998 while LME nickel inventories <MNISTX-TOTAL> touched a new low since June 2013, LME data showed on Friday.

In China, on-warrant nickel stocks fell to the lowest levels since July 2005, weekly data from the Shanghai Futures Exchange showed on Friday.

* ZINC SPREADS: The premium of LME cash zinc over the three-month contract <CMZN0-3> climbed to $64 per tonne, the highest since early January, from $3.50 three weeks ago, indicating tight supply.

* RUSAL ALUMINIUM: Investor concerns about rising supply of aluminium were heightened by the announcement by Russia's Rusal on Friday that it has launched new production at its Boguchansk aluminium smelter in Siberia on Friday, doubling its capacity to 298,000 tonnes a year.

LME aluminium was bid up 0.5 percent to $1,913 a tonne in official rings.

* OTHER METALS: Nickel climbed 1.9 percent to trade at $13,120 in official activity, lead gained 0.6 percent to $2,032 and tin dipped 0.1 percent to $21,400 a tonne.

(Additional reporting by Mai Nguyen in SINGAPORE, editing by Louise Heavens and David Evans)