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METALS-Zinc tumbles after big delivery into LME warehouses |

(Updates with closing prices)
By Peter Hobson
LONDON, April 16 (Reuters) – Zinc prices fell more than 3
percent on Tuesday as a big inflow into London Metal Exchange
(LME) warehouses fanned expectations that a supply deficit will
soon end.

Benchmark zinc on the LME closed down 3.1 percent at
$2,809.50 a tonne, the biggest daily fall since August, after
hitting a three-week low.

The metal used chiefly to galvanise steel has risen around
14 percent this year thanks to a supply shortfall that drove LME
inventories to record lows. Prices reached a 9-1/2-month high of $2,958 a tonne on April
4.
However, analysts expect a recent rise in mined zinc
production to feed through to the refined metal market from the
second quarter of this year.

This increase in supply will drag prices to around $2,300 by
the year-end, Capital Economics analyst Ross Strachan said. He
said zinc would perform worse than other industrial metals.

ZINC STOCKS: Headline zinc stocks in LME-registered
warehouses jumped by 10,350 tonnes to 66,475 tonnes, rising from
a record low of around 50,000 tonnes earlier this month. Stocks in warehouses monitored by the Shanghai Futures
Exchange rose sharply during a seasonal lull in Chinese
manufacturing in the first quarter, but have slipped in recent
weeks to 101,000 tonnes. ZINC SPREAD: The premium of cash zinc over the three-month
contract on the LME fell to $89 from more than $100 on Friday,
but remains far above usual levels, pointing to a shortage of
immediately available metal. COLUMN: Zinc is coming under sustained attack from bearish
funds, writes columnist Andy Home. CHINA ECONOMY: Positive economic data in China, the largest
consumer of metals, has supported the demand outlook.

China’s fiscal spending increased 15 percent during
January-March from levels a year earlier and local governments
quickened bond issuance for key projects, the finance ministry
said. Data shows new home prices in China grew slightly faster in
March and new bank loans rebounded last month far more than
expected. CHINA OUTLOOK: But the OECD said China’s stimulus may
undermine the country’s drive to control debt and worsen
structural distortions over the medium term. U.S. FACTORIES: U.S. manufacturing output suffered the
largest quarterly decrease in production since 2017. STEEL: Growth in global steel demand will weaken to 1.3
percent in 2019 and 1 percent next year, the World Steel
Association said. Zinc and nickel are used in steelmaking. OTHER METALS: LME copper ended up 0.2 percent at
$6,495 a tonne, aluminium fell 0.5 percent to $1,856,
lead slipped 1.7 percent to $1,920 and tin finished down 0.4 percent at $20,500.
Nickel did not trade in closing rings, nor were
there any bids or offers. In electronic trading, prices were
down 0.3 percent at $12,955 a tonne at 1614 GMT.

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Top Base and Precious Metals Analysis – GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
(Reporting by Peter Hobson; Additional reporting by Mai Nguyen;
Editing by Dale Hudson and Emelia Sithole-Matarise)

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