METALS-Signs of tight supply push copper and zinc towards weekly gains


 (Updates prices) By Peter Hobson LONDON, Nov 16 (Reuters) - Copper was set to end the week
2.5 percent higher as signs of supply tightness supported
prices, but worries about the outcome of the U.S.-China trade
dispute limited gains. Supply shortages were also powering zinc towards a 4 percent
weekly gain -- its biggest since September. Benchmark copper on the London Metal Exchange was up
0.4 percent at $6,209.50 a tonne at 1559 GMT. Prices rallied after news that Chinese smelter Jiangxi
Copper and miner Antofagasta had agreed
lower treatment and refining charges for 2019, said ING analyst
Warren Patterson. "This is showing that either there is a tightening in
concentrate supply or too much spare smelting capacity in China.
I think it's a mixture of the two," he said. Metals received a further boost when the U.S. dollar
weakened after Federal Reserve officials appeared to question
the pace of interest rate rises and from strong U.S.
manufacturing data. A weaker dollar makes metals cheaper for buyers who hold
other currencies. But while the fundamentals were good for copper, uncertainty
about U.S.-China trade talks were weighing on prices, Patterson
added. COPPER STOCKS: Headline copper inventories in LME-registered
warehouses MCUSTX-TOTAL fell by 5,425 tonnes to 161,025
tonnes, nearing last month's 10-year low of 136,675 tonnes. SPREAD: Another signal of tight supply is the premium of
cash copper over the three-month contract MCU0-3, which has
drifted from a near four-year high of $47 last month to $20.50
but is still far above recent norms. TECHNICALS: Copper was holding above its technically
important 50-day and 100-day moving averages around
$6,160-$6,165. U.S.-CHINA TRADE TALKS: A senior White House official told
Reuters a written response sent this week by China to U.S.
demands for trade reforms was unlikely to trigger a breakthrough
at talks. Worries that rising tariffs could damage China's economy
have helped to push industrial metals prices sharply lower in
recent months. China is the world's largest consumer of metals. ZINC: Benchmark LME zinc was up 1.5 percent on the
day at $2,617 a tonne and up 3.7 percent this week, with
stockpiles in the LME's warehouse system falling to a
10-1/2-year low of 125,400 tonnes. MZNSTX-TOTAL SPREAD: The premium of cash zinc over three-month metal
MZN0-3 has surged to $75.75, the highest since October last
year, from a discount of more than $20 two months ago,
suggesting a shortage of available material. OTHER METALS: LME aluminium was up 0.3 percent at
$1,935 a tonne, nickel was 1.4 percent higher at
$11,415, lead had gained 3.1 percent to $1,990 and tin was flat at $19,385. (Additional reporting by Mai Nguyen
Editing by Edmund Blair, Dale Hudson and Kirsten Donovan) 

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