Zinc hits two-week low on worries about China-US trade

LONDON: Zinc slumped to a two-week low on Monday falling along with other industrial metals as speculators sold in response to concerns about U.S.-China trade talks and global growth.

China expressed anger on Monday at a U.S. Navy mission through the disputed South China Sea after U.S. President Donald Trump said last week that he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline for a trade deal.

Chinese investors, returning after a week-long national holiday, seemed to focus more on downbeat news rather than optimism expressed by China on Monday about a new round of trade talks with the United States.

"You had seen quite a run-up in base metals prices, with lots of positivity on the trade negotiations, and now that balloon seems to have been punctured somewhat," said Ross Strachan, senior commodities economist at Capital Economics in London.

"There seems to be more realisation that trying to get a permanent long-term deal between those two parties is extremely difficult to imagine."

Benchmark zinc on the London Metal Exchange had shot up by nearly a fifth in the month to Feb. 5, when it touched a seven-month peak of $2,810 a tonne.

Since then, however, it has slipped 6 percent and was the biggest LME decliner on Monday. It fell 2.2 percent in closing open outcry activity to $2,644 a tonne, having earlier touched $2,631, the lowest since Jan. 25.

* ZINC STOCKS: Investors apparently brushed off news that LME zinc inventories have eroded further to their lowest since January 2008.

* ZINC TECHNICALS: Zinc attracted additional selling because of a weak chart picture, Marex Spectron's Matt France said in a note. "Zinc looks most vulnerable technically as it has breached the 200-day moving average at $2,660."

* COPPER: Three-month LME copper shed 1 percent to finish at $6,150 a tonne after Chilean state miner Codelco said on Saturday that it hoped to restart operations soon at its Chuquicamata copper mine.

* LEAD: LME lead gave up 1.7 percent to close at a two-week low of $2,045.50 a tonne.

A pullback in lead is expected to be short-lived, Stéphanie Aymes, head of technical analysis at Societe Generale, said in a note. "Once a move beyond $2,132/35 takes shape, lead will extend the recovery towards $2,185 and perhaps even towards the May 2018 trough at $2,241/28."

* DOLLAR: Also weighing on metals was a stronger dollar, making dollar-denominated metals more expensive for holders of other currencies.

* PRICES: Aluminium closed unchanged at $1,880 a tonne, nickel fell 0.6 percent to $12,490 and tin  eased by 0.1 percent to $21,025.