Zinc touches three-week low on trade tension, weak steel prices

LONDON: Zinc prices touched a three-week low on Tuesday as speculators added bearish positions amid persistent trade concerns and a slide in steel prices.

"The trade war theme is the overarching influence in the context of varying degrees of short positioning among the metals complex," said analyst Nicholas Snowdon at Deutsche Bank in London.

U.S. President Donald Trump warned last week that he was ready to levy additional tariffs on practically all Chinese imports, while China is prepared to ask the World Trade Organization next week for permission to impose sanctions on the United States.

CTA (Commodity trading advisors) funds unleashed more selling in the zinc market, Alastair Munro at broker Marex Spectron said in a note.

"Shorts are rebuilding, with the trend suggestive of the market testing the $2,325 support and then that $2,283 low from mid-August."

Benchmark zinc on the London Metal Exchange was down 1.2 percent at $2,351.50 a tonne by 1000 GMT, the lowest since Aug. 17.

* STEEL PRICES: Zinc, mainly used for galvanising steel, was also pressured by a slide in Chinese steel futures of more than 4 percent after a source involved with China's output-cut plan said the environment ministry may allow northern provinces to set their own production curbs over winter.

* NICKEL: LME nickel, largely used to make stainless steel, also felt the chill from the losses on the steel market, slipping 0.3 percent to $12,375 a tonne.

* ZINC STOCKS: LME zinc inventories have climbed 74 percent since the beginning of March to 229,675 tonnes.

* ALUMINIUM: Aluminium failed to build on its 1.3 percent rebound on Monday, falling 0.5 percent to $2,084 a tonne, after a report that Russian aluminium producer Rusal may start output cuts this month due to U.S. sanctions.

"I think we're probably still some way off from Rusal actually cutting production, but it's an indication of the scenario we could go back to as we saw in April," Snowdon said.

* COPPER: LME three month copper gave up earlier gains and slipped 0.3 percent to $5,893 a tonne.

* DOLLAR: The U.S. dollar rebounded from losses and was trading flat, erasing the benefit for dollar-denominated assets such as commodities.