LONDON: Zinc slid to a two-month low on Monday, falling for a fifth straight session as inventories surged and as concerns about proposed US trade tariffs weighed on metals used in steel manufacturing.
Zinc, which is most commonly used to galvanise steel, has fallen nearly 8 percent since hitting its highest in more than a decade last month, at $3,595.50 a tonne.
It came under pressure last week along with aluminium and fellow steel component nickel after US President Donald Trump announced plans to impose hefty tariffs on imported steel and aluminium to protect US producers.
"It has always been our view that zinc prices would fall back quite sharply this year, regardless of what happened with steel, which is obviously a concern," Capital Economics analyst Caroline Bain said.
"It has had the most phenomenal rally and there was always scope for it to eke back. On the fundamental level we think mine supply grew strongly last year and we see more of that this year, so we see the market tightness easing."
ZINC PRICES: London Metal Exchange zinc was down 1 percent at $3,323 a tonne at 1035 GMT, having slid 4.2 percent last week, its biggest weekly loss since late November.
ZINC INVENTORIES: Zinc stocks held in London Metal Exchange warehouses surged 59 percent on Monday to 209,050 tonnes, while on-warrant levels nearly doubled to 162,825 tonnes.
NICKEL, ALUMINIUM: Other metals potentially affected by the tariffs were also under pressure, with nickel 0.3 percent lower at $13,410 a tonne and aluminium flat at $2,149 a tonne.
ALUMINIUM: Some Chinese aluminium producers that shut smelters during a winter crackdown on pollution may not reopen this spring once output curbs are lifted.
CURVE: LME aluminium spreads showed easing in supply tightness mid-year when more China production is expected to come online.
COPPER: LME copper was little changed at $6,901 a tonne. Prices are expected to recover as manufacturing demand cranks up into the seasonally strongest second quarter.
CHINA ECONOMY: China aims to expand its economy by around 6.5 percent this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said Monday.
COPPER: Hedge funds and money managers cut their net long positions in COMEX gold and copper contracts in the week to Feb. 27, US Commodity Futures Trading Commission data showed on Friday.
OTHER METALS: LME lead was down 0.2 percent at $2,443.50 a tonne, while tin was up 0.4 percent at $21,565 a tonne.
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