Shanghai copper steady; zinc soars on supply worries

SHANGHAI, Jan 30 (Reuters) - Shanghai copper was steady on Wednesday, while aluminium and zinc jumped, fuelled by gains in London base metals and supply concerns due to stoppages at Chinese smelters.

The April copper contract, the most active on the Shanghai Futures Exchange, closed down 20 yuan at 60,530 yuan ($8,414) a tonne, after gaining 2.6 percent in the previous session.

Wintry weather slowed deliveries of copper, said a Shanghai-based LME trader, but heavy snow also hampered consumption.

"Chinese fabricators will finish their purchasing for production during the Lunar New Year holidays by the end of this week, while we expect more imports will be delivered in Shanghai in early February," he said.

Traders forecast that copper stockpiles monitored by the Shanghai Futures Exchange would rise marginally this week, from their lowest level since mid-2005.

The Shanghai Futures Exchange has removed a regulation requiring traders who deliver copper and aluminium to the exchange to show duty-paid certificates, as China recently removed all duties on imported refined copper and primary aluminium, the exchange said in a notice filed early this week.

In Shanghai's spot market, prices rose 600 yuan a tonne, ranging between 62,100 yuan and 62,400 yuan. The spot premium dropped 450 yuan to around 100 yuan a tonne.

Copper for delivery in three months on the London Metal Exchange fell $51 to $7,240 a tonne by 0703 GMT, after gaining more than 3 percent on Tuesday to hit a two-week high after strong U.S. economic data.

"Stiffer resistance lies at the $7,450 mark, which we think will hold at this point. When we do get some selling, it should be after the Fed decision is out of the way," MF Global analyst Edward Meir said in a note. The U.S. Federal Reserve is expected to cut benchmark interest rates by half a percentage point on Wednesday after a two-day meeting. Last week, it slashed rates by 75 basis points to 3.5 percent to help boost confidence.

SHUTDOWN BOOSTS PRICES

Chaotic winter weather has besieged China's business and farming heartland, with no quick end in sight to weeks of snow and ice that have trapped energy and food flows ahead of a big national holiday.

Icy temperatures, snow and sleet pummelling much of central, eastern and southern China have forced some major metals firms to halt their facilities because of power interrupt, reducing production of aluminium, lead, zinc, antimony and ferroalloys in snow-hit Chinese provinces.

China's top zinc producer Zhuye shut all production facilities on Tuesday night amid a blackout, its board secretary said on Wednesday. The firm runs a 400,000 tonne-a-year zinc facility and a 100,000 tonne-a-year lead smelter.

Shanghai's most-traded April zinc ended up 2 percent at 19,580 yuan a tonne, while three-month London zinc was down $30 at $2,350 a tonne.

The April aluminium contract on the Shanghai Futures Exchange rose 150 yuan to 19,390 yuan a tonne, while LME aluminium lost $10 to $2,640.

"Apparently Chinese smelters lost some output during the snow storms, but rapid expansion will help them to catch up in the remainder of the year," said analyst Wu Peng at Jinrui Futures.