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METALS-Zinc hits highest in a decade on China construction spend

METALS-Zinc hits highest in a decade on China construction spend
From Reuters - August 16, 2017

* LME/ShFE arb: tmsnrt.rs/2oQ5nm20 (Updates with official prices)

By Peter Hobson

LONDON, Aug 16 (Reuters) - Zinc rose to its highest in almost a decade on Wednesday and aluminium hit a 33-month high on expectations of strong global demand, tighter supplies and speculative buying.

"Momentum funds are buying the strength, piling in as the price rises," a metals trader in London said. But forward selling by producers keen to lock in a high price was limiting gains, he said.

"These levels are likely too high from a market fundamental point of view," Danske Bank analyst Jens Pedersen said.

LME ZINC: Benchmark zinc on the London Metal Exchange did not trade in official rings but was bid up 2.2 percent at $3,026 after earlier touching $3,037, the highest since October 2007.

ZINC: The metal used to galvanise steel is benefiting from Chinese infrastructure development and higher steel prices caused by capacity cuts, ANZ analyst Daniel Hynes said.

SWITCH: Chinese traders were also diverting money from steel to zinc on the Shanghai Futures Exchange after a hike in steel trading fees.

CHINA ECONOMY: Strong growth in the world's largest consumer of metals showed signs of fading in July but activity remained solid thanks to a year-long construction spree.

The International Monetary Fund meanwhile raised its 2018-2020 average growth forecast for China and bank lending exceeded expectations.

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