Zinc falls on rising supply concerns; copper gains on dollar slump

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SINGAPORE, (Reuters) - Zinc prices fell on Tuesday on concerns that metal smelters may raise supply amid a surge in treatment charges while copper and other base metals climbed after the dollar declined.

London benchmark zinc fell 0.8 percent to $2,883 a tonne by 0416 GMT, and the most active zinc contract on the Shanghai Futures Exchange dropped 1.6 percent to 22,710 yuan ($3,382.53) a tonne.

Market participants are concerned that supplies of finished zinc will surge after smelters and miners agreed to a sharp rise in the latest treatment and refining charges. For Chinese smelters, those charges have climbed to about 6,350 yuan ($945.83) a tonne for domestic concentrate from 3,500 yuan at the start of 2018.

"Current profits for the smelters are very high. This will push smelters to increase their utilisation rate," said Dina Yu, an analyst at metals consultants CRU in Beijing, adding Chinese smelters are earning profits of as much as 3,000 yuan ($446.85) a tonne, a record high.

The overall base metal market traded higher after the dollar fell for a second day against a basket of major currencies . Dollar-denominated base metals tend to rise as they are cheaper for buyers paying in other currencies.

FUNDAMENTALS

* On-warrant LME zinc inventories rose 6 percent to 46,725 tonnes after touching record lows in late March, according to daily LME data on Monday.

* Indigenous villagers in Peru who have been blocking MMG Ltd's Las Bambas copper mine for two months will vote on Tuesday to decided whether they agree with a deal signed by their community president and the Chinese miner the day before.

* Anglo American, one of the world's top miners, says productivity could jump by as much as a third at its Chilean copper mines within three years as it rolls out new technologies.

* Three-month copper on the London Metal Exchange rose 0.6 percent to $6,511.50 a tonne, while aluminium edged up 0.2 percent, nickel rose 0.4 percent, lead was up 0.5 percent and tin advanced 0.5 percent.

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MARKETS NEWS

* Asian shares got off to a subdued start as investors braced for key events later in the week, including the kick-off of the U.S. earnings season and a crucial Brexit summit, while broader concerns over slowing global growth checked sentiment.

DATA/EVENTS (GMT)

0130 Australia Housing Finance Feb

1200 Brazil Retail Sales YY Feb

PRICES

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