UPDATE 7-China power, supply fears boost aluminium

(Adds NEW YORK to dateline, updates with New York closing copper prices)

By Pratima Desai and Anna Stablum

NEW YORK/LONDON, May 15 (Reuters) - Aluminium futures jumped to a
three-week high on Thursday as investors piled into the metal in
expectation of supply shortfalls from China, while tin hit a record high.

Aluminium MAL3 for delivery in three months on the London Metal
Exchange touched $3,027 a tonne, the highest since April 24 and ended at
$3,010 a tonne, up from $2,938 a tonne at the close on Wednesday.

Analysts said this week's earthquake in China's Sichuan province and
disruption to hydro power supplies and possibly aluminium output had
triggered the latest spurt of buying.

"There's quite strong investor interest in aluminium on the basis China
might be about to suffer severe power shortages which could drive aluminium
smelters offline," said John Kemp, an analyst at RBS Sempra Metals.

These worries come on top of the usual worries about power shortages
during the summer season in China, when the use of air conditioning rises.

Electricity accounts for about one-third of the costs -- estimated on
average around $2,400 a tonne -- of making aluminium.

China is the world's largest aluminium producer with an annualised
capacity of around 12.5 million tonnes.

However, analysts say Sichuan output represents only about 4 percent or
about 500,000 tonnes of overall capacity and that the market is using the
quake as an excuse to drive prices higher.

ABSENT BUYERS

Tin MSN3 touched an all-time high of $25,500 a tonne. It was untraded
at the close but bid at $25,250 from Wednesday's last bid at $25,150.

The metal is up nearly 60 percent since the beginning of this year on
worries about supplies from top producers China and Indonesia and low
stocks in LME warehouses, which at around 7,700 tonnes, are the lowest
since September 2005.

Copper MCU3, taking its lead from aluminium, hit an intraday high at
$8,305 a tonne, before ending at $8,296, up $176 from Wednesday.

At the New York Mercantile Exchange's COMEX division, copper for July
delivery HGN8 settled up 5.75 cents at $3.7385 a lb, after dealing in a
session range between $3.6665 and $3.7725.

Traders said the metal used in power and construction had come under
some pressure since stocks have started to rise and Chinese buyers remained
on the sidelines.

Stocks in LME warehouses stand at just under 121,000 tonnes from below
110,000 earlier this month.

"We still think copper is going to drift due to a lack of Chinese
purchasing," said analyst Max Layton at Macquarie Bank.

Copper hit record highs of $8,880 a tonne on April 17 in London and
$4.2605 a lb in New York on May 5, as the markets fretted about miners'
strikes in Chile and Peru.

Zinc MZN3 rose to $2,315 from $2,285 on Wednesday. The metal used to
galvanise steel has been buoyed by news of supply disruptions in China
after the earthquake.

Local governments in the southern part of Gansu and Shaanxi have
ordered zinc smelters to close because of fear of aftershocks and to carry
out safety inspections. [ID:nSP71840]

"We think zinc losses will be between 20,000 and 30,000 tonnes,"
Macquarie Bank's Layton said.

Lead MPB3 ended higher at $2,275 a tonne from $2,255, while nickel
MNI3 slipped to $26,305 compared with Wednesday's last bid at $26,500.

Metal Prices at 1745 GMT
Metal Last Change Pct Move End 2007 Ytd Pct

move
LME Cu 8296.00 176.00 +2.17 6670.00 24.38
SHFE Cu* 61640.00 -260.00 -0.42 56880.00 8.37
LME Alum 3000.00 62.00 +2.11 2403.00 24.84
SHFE Alu* 19040.00 -50.00 -0.26 18180.00 4.73
COMEX Cu** 376.10 5.40 +1.46 303.05 24.10
LME Zinc 2315.00 30.00 +1.31 2370.00 -2.32
SHFE Zinc* 18470.00 -370.00 -1.96 18950.00 -2.53
LME Nick 26305.00 -745.00 -2.75 26350.00 -0.17
LME Lead 2275.00 20.00 +0.89 2550.00 -10.78
LME Tin 25200.00 50.00 +0.20 16400.00 53.66
** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU
and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Chris Kelly in New York)
(Editing by Chris Johnson)
(pratima.desai@thomsonreuters.com; +44 20 7542 5113))