LONDON, Nov 16 (Reuters) - Copper on Friday was set to end
the week nearly 2 percent higher as signs of supply tightness
supported prices, but worries about the outcome of a U.S.-China
trade dispute limited gains.
Supply shortages were also powering zinc towards its biggest
weekly gain since September.
Benchmark copper on the London Metal Exchange was
down 0.3 percent at $6,165.50 a tonne at 1126 GMT but up 1.8
percent this week.
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.
But while the fundamentals were good for copper, uncertainty
about U.S.-China trade talks were weighing on prices, he 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 $14 but
is still far above recent norms.
TECHNICALS: Copper was holding just 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 down 0.3 percent at
$2,568 a tonne but up 1.8 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 $74, the highest since October last year,
from a discount of more than $20 two months ago, suggesting a
shortage of available material.
DEFICIT-OUTLOOK: The roughly 13.5 million tonne global zinc
market had a 305,000 tonne deficit in the first eight months of
this year, the International Lead and Zinc Study Group (ILZSG)
said this week. Analysts expect, however, that supplies will
increase into next year, keeping a lid on prices.
OTHER METALS: LME aluminium was up 0.4 percent at
$1,937 a tonne, nickel was 0.9 percent higher at
$11,360, lead had gained 2.2 percent to $1,972.50 and
tin was down 0.1 percent at $19,380.
