It is still on course for a 3 percent gain this week, which would be its best week in six, as investors worry about tight stocks.
The low-inventory situation, as well as fears of production outrages, has spurred the backwardation in London Metal Exchange zinc higher, Jinrui Futures said in a note.
The premium for cash zinc over the three-month LME contract <CMZN0-3> stood at $55 a tonne on Thursday, the highest since early January.
Some speculators on the ShFE had previously bet that the planned cut in VAT on China's manufacturing sector, whichincludes non-ferrous metals, to 13 percent from 16 percent would be implemented on May 1, increasing the backwardation on metals including copper and aluminium.
FUNDAMENTALS
* LME ZINC: Three-month LME zinc was trading down 0.9 percent at $2,800 a tonne, as of 0743 GMT. The most traded May ShFE zinc contract rose as much as 1.4 percent to 22,170 yuan ($3,299.55) a tonne, the highest since April 2, before closing down 1 percent.
* ZINC: Vedanta Zinc International, a unit of diversified miner Vedanta Resources, said on Thursday it would close its zinc refinery in Namibia for five weeks after a strike by its mining contractor depleted stocks.
* COPPER: Benchmark LME copper added 0.5 percent to $6,435.50 a tonne, while ShFE copper inched up 0.1 percent to 49,320 yuan a tonne.
* SPREADS: The backwardation between the March and April ShFE copper contracts spiked to over 1,000 yuan a tonne, the highest since May 2014, after Li's comments. The spread between April and May, previously in a steep back wardation, immediately flipped into a deep contango.
* VOLUMES: Trading volumes on the May ShFE copper contract were 326,806 lots, almost double the 30-day average.
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MARKETS NEWS
* Asian stocks advanced as sentiment improved on a report that U.S.-China trade talks were making progress and after UK lawmakers voted to delay a potentially chaotic exit from the European Union.