Commodities

METALS-Shanghai zinc soars as power price hikes hit output

Credit: REUTERS/© Ilya Naymushin / Reuters

Shanghai zinc prices surged 8% on Monday, as investors fretted over supply shortage amid production cuts due to electricity price hikes in Europe.

Oct 18 (Reuters) - Shanghai zinc prices surged 8% on Monday, as investors fretted over supply shortage amid production cuts due to electricity price hikes in Europe.

The most-traded November zinc contract on the Shanghai Futures Exchange SZNcv1 advanced as much as 8% to 27,720 yuan ($4,305.62) a tonne, its highest since August 2007.

Three-month zinc on the London Metal Exchange CMZN3 rose 1.1% to $3,835 a tonne by 0302 GMT, after surging a record 20.4% last week to close at its highest since June 2007 on Friday.

Belgium-based Nyrstar NYR.BR said last week it would cut production by up to 50% at its three European zinc smelters and Glencore GLEN.L, which also has three zinc smelters in Europe, said it was "adjusting production" to save energy costs.

Metals have also been increasingly attractive to investors as a tool to hedge against inflation risk.

FUNDAMENTALS

* LME copper CMCU3 up as much as 1.7% to $10,452.50 a tonne, its highest since May 18 and only 2.7% below its record high level of $10,747.50 a tonne. ShFE copper SCFcv1 climbed to a level unseen since May 13 at 76,700 yuan a tonne.

* LME on-warrant copper stocks MCUSTX-TOTAL dropped to their lowest since 1998 at 14,150 tonnes, while ShFE copper inventories CU-STX-SGH were at their lowest since June 2009 at 41,668 tonnes.

* ShFE aluminium SAFcv1 jumped to a level unseen since May 2006 at 24,700 yuan a tonne and LME aluminium CMAL3 advanced 0.5% to $3,186 a tonne, having hit its highest since July 2008 at $3,215 a tonne in the previous session.

* China's September aluminium output in September declined for a fifth consecutive month due to Chinese electricity shortages.

* For the top stories in metals and other news, click

TOP/MTL or MET/L MARKETS NEWS

* Mainland Chinese and Hong Kong equity markets fell after data showed China's economy grew more slowly than expected in the third quarter, weighing on regional stocks, athough losses were capped by hopes of support from policymakers. MKTS/GLOB DATA/EVENTS (GMT)

1315 US Industrial Production MM Sept

($1 = 6.4381 yuan)

(Reporting by Mai Nguyen in Hanoi; Editing by Rashmi Aich)

((mai.nguyen@thomsonreuters.com; +842438259623; Reuters Messaging: mai.nguyen.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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