METALS-London zinc edges higher on supply concerns
Melanie Burton
SYDNEY, Nov 11 (Reuters) - London zinc prices edged higher on Tuesday as supply concerns resurfaced following a strike at a Peruvian mine, while London copper was little changed after a near 1 percent drop in the previous session.
Zinc prices are up around 10 percent this year on expectations of a deficit.
"Speculators have driven prices higher recently on the basis that mine supply won't keep up with demand," said analyst Mark Keenan of Societe Generale in Singapore.
"We see zinc up to $2,400 in the fourth quarter this year. Both zinc and lead we're pretty bullish on," he added.
Three-month zinc on the London Metal Exchange rose 0.7 percent to $2,258.50 a tonne, while Shanghai Futures Exchange zinc prices traded up 0.3 percent.
Workers at Peru's Antamina mine began an indefinite strike on Monday, disrupting operations. The mine is Peru's largest copper mine and its largest zinc mine.
Adding to supply worries, ShFE zinc stocks fell by a fifth on Friday to five-year lows of 111,761 tonnes, while ShFE cash prices have traded at a premium against third month prices since late September, a sign of supply stress.
Zinc demand is being supported by new infrastructure projects in China, Keenan said.
China is spending 200 billion yuan ($32.7 billion) to build seven new railway lines, according to local media reports last week.
The impact of the mine strike on copper was muted. LME copper was unchanged at $6,662 a tonne by 0353 GMT from the previous session when it slipped 0.8 percent. The most-traded January copper contract on the Shanghai Futures Exchange eased 0.3 percent to 47,240 yuan ($7,719) a tonne.
Also eroding surplus expectations, and potentially supporting prices, last week's ousting of Mongolia's prime minister is likely to delay talks on resolving a dispute over the country's Oyu Tolgoi copper and gold mine, joint-mine owner Turquoise Hill Resources Ltd said.
Elsewhere, lead presented some upside opportunities given it was one of the worst performers so far this year, although its fundamental picture was not so bad, Keenan said.
LME lead slipped 0.2 percent to $2037 a tonne, and is down more than 8 percent this year.
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