* LME zinc, aluminium stocks at multi-year lows
* Asian stock index touches 3-year high, helps metals
(Adds closing prices)
By Maytaal Angel
LONDON, July 22 Zinc hit a three-year high and
aluminium touched a 16-month peak on Tuesday as investors sought
more exposure to commodities with tightening supply-demand
balances and were encouraged by falling inventories and firm
London Metal Exchange stocks of zinc fell by 400 tonnes to
656,275 tonnes, their lowest in 3-1/2 years, while aluminium
stocks fell by 9,075 tonnes to 4.938 million tonnes, their
lowest in nearly two years. MZN-STOCKS MAL-STOCKS
Investors are slowly being drawn back into commodities,
attracted by stronger global economic growth and more volatility
within some sectors, typified by current investment flows out of
grains into industrial metals.
"There's a certain amount of relative value going on where
investors prefer one metal over another," Macquarie analyst
Vivian Lloyd said.
She added, however: "In our view it's premature. The real
tightness (in zinc) will hit next year, but (right now) it's a
market half the size of copper with four times as much stock."
Three-month zinc on the London Metal Exchange rose
to $2,373, the highest since August 2011, before closing at
$2,362 a tonne from $2,336 at the close on Monday. It has risen
around 15 percent so far this year.
Forecasts for zinc prices have been driven higher this year
by a paucity of big mine projects just as existing mines such as
Century in Australia dry up.
Also, data on Monday showed China's zinc imports rose 123.55
percent in June year on year to 68,475 tonnes, bringing gains
for the year to 38.14 percent.
Helping metals generally, a major index of Asian stocks
touched a three-year high on Tuesday, while a Chinese index of
the leading Shanghai and Shenzhen A-share listings closed at its
highest in three months.
"The combination of stronger growth but less stimulatory
monetary policy in the U.S. is more likely to be a net positive
for commodity prices - especially industrial metals - than for
those of other assets ... provided there are no further shocks
from China," Capital Economics said in a note.
China's is the world's largest base metals consumer.
LME aluminium reached as high as $2,054 a tonne, the
loftiest since February last year, bringing gains for the year
to around 13 percent. It closed at $2,043 a tonne from $2,020.
The discount for cash aluminium over the three-month price
CMAL0-3 has fallen to 18-month lows amid dwindling exchange
stocks, reigniting a long debate about how tight the market
Years of aluminium smelter cutbacks due to depressed prices
have eroded supply just as global demand recovers, in part due
to a revival in the U.S. and European auto sectors.
Still, aluminium stocks remain high overall, with just under
five million tonnes sitting in LME warehouses, and output in
China is on the rise, prompting some analysts to question the
sustainability of the rally.
LME copper closed at $7,040 a tonne from $7,025 at
the close on Monday, recovering a touch after recent inflows to
exchange stocks sparked concern that an expected shift into
surplus had begun.
The global world refined copper market showed a 183,000
tonne deficit in April, compared with an 84,000 tonne deficit in
March, the International Copper Study Group said in its latest
LME lead closed at $2,217 a tonne from $2,203, while
tin closed at $22,125 a tonne from $22,200 and nickel
at $19,000 a tonne from $18,825.
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin
($1 = 6.2048 Chinese Yuan)
(Additional reporting by Melanie Burton; editing by Jane Baird
and Keiron Henderson)