LONDON: Zinc prices touched a two-week low on Wednesday on concerns that Chinese smelters will increase output and create a surplus.
Other industrial metals fell after the International Monetary Fund (IMF) cut its global growth forecasts, pointing to weak future demand, and the United States threatened to impose tariffs on goods from the EU.
Benchmark zinc on the London Metal Exchange (LME) traded up 0.1 percent at $2,862.50 a tonne in official rings after hitting $2,842, the lowest since March 26.
Shortages had driven zinc to a nine-month high of $2,958 on April 1, but the supply situation is expected to change rapidly after Chinese treatment charges soared to $240 a tonne from a low of $12.50 at the start of 2018.
Smelters were likely to seize the opportunity to make money by ramping up production in the second quarter, said Deutsche Bank analyst Nick Snowdon.
LME STOCKS/SPREAD: Headline stocks of zinc in LME-registered warehouses at 52,550 tonnes are hovering around record lows and the premium for cash zinc over three month metal at $68 suggests a shortage of nearby material.
SHFE STOCKS: However, stockpiles in warehouses monitored by the Shanghai Futures Exchange (ShFE) at 108,772 tonnes are up from around 20,000 tonnes at the start of the year.
MINE SUPPLY: Global mine supply of zinc - mainly used for galvanising steel - is expected to rise 6.4 percent this year to 13.87 million tonnes, according to the International Lead and Zinc Study Group (ILZSG).
REFINED SUPPLY: But higher mine production has been slow to impact the refined market, with the ILZSG showing a 384,000 tonne deficit in 2018 and another shortfall in January.
GLOBAL GROWTH: The IMF cut its forecast for world economic growth this year to 3.3 percent from 3.5 percent, and said chances of further cuts were high.
TRADE WAR: US President Donald Trump threatened to impose tariffs on $11 billion worth of European Union products, opening a new front in his trade war.
LAS BAMBAS: An indigenous community voted to suspend its 2-month road blockade of Las Bambas, a large Peruvian copper mine, for two days until the government visits the region on Thursday.
ALUMINA: Emirates Global Aluminium said its Al Taweelah alumina refinery in Abu Dhabi had commenced operations. It is expected to produce 2 million tonnes of alumina a year once fully operational.
OTHER METALS: LME copper traded down 0.3 percent at $6,465 a tonne, aluminium fell 0.1 percent to $1,875.50, lead slipped 0.1 percent to $1,974 and tin retreated 0.4 percent to $20,790. Nickel did not trade but was bid 0.3 percent lower at $13,180.
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