LONDON - Zinc prices rose to their highest in more than three weeks on Monday due to expectations of stronger demand from easing COVID lockdowns in top consumer China, low inventories and a sliding dollar.

Benchmark zinc on the London Metal Exchange traded up 2.7% at $3,948 a tonne in official rings. Prices of the metal used to galvanise steel earlier touched $3,995.50 a tonne, the highest since May 5.

"Optimism about Chinese demand has resurfaced, it looks like restrictions will be lifted gradually," a zinc trader said. "But, really, the zinc story is all about stocks and output cuts."

LOCKDOWNS: Residents in two Beijing districts have been allowed to return to work, while Shanghai inched closer towards lifting its two-month old COVID-19 lockdown from Wednesday, as the number of infections across China dropped.

INVENTORIES: Zinc stocks in LME registered warehouses at 84,700 tonnes are at their lowest since April 2020. Cancelled warrants — metal earmarked for delivery — at 48% suggest more metal is due to leave LME warehouses.

EUROPE: Shortages of zinc are particularly acute in Europe where record-high power costs have led to production cuts.

Europe accounts for about 15% of global production capacity of refined zinc, estimated at around 14 million tonnes in 2022.

Zinc stocks in LME warehouses in Europe stand at 225 tonnes, but only 25 tonnes of this is available to the market.

Worries about supplies have widened the premium for the cash over the three-month zinc contract to $25 a tonne, compared with $1 two weeks ago.

TECHNICALS: Zinc prices face resistance at the 50-day moving average currently sitting around $4,010, while strong support comes from the 100-day moving average around $3,840.

DOLLAR: A weaker U.S. currency makes dollar-denominated metals cheaper for holders of other currencies, which could boost demand for industrial metals.

OTHER METALS: Copper was up 0.7% at $9,530, aluminium rose 0.6% to $2,890, lead gained 1.1% to $2,183.5, tin added 1.6% to $34,650 and nickel climbed 5.9% to $29,950 a tonne.

Traders say a lack of liquidity is behind the large moves in nickel prices.

(Reporting by Pratima Desai; editing by Jason Neely)