(Updates prices) By Eric Onstad LONDON, Aug 16 (Reuters) - Zinc prices hit their strongestin two months on Tuesday after production was suspended at aDutch smelter because of high power prices, stoking fears ofshortages. Benchmark zinc on the London Metal Exchange (LME)jumped by as much as 7.2% to its highest price since June 9 at$3,819 a tonne, representing the biggest one-day gain since lastOctober. It later gave up most of the gains and was up 1.6% to$3,621.50 at 1615 GMT. Nyrstar said it would put its zinc smeltingoperations at Budel in the Netherlands on care and maintenancefrom Sept. 1. Nyrstar had already cut output by up to 50% at its threeEuropean zinc smelters, while Glencore said this monththat "the current energy supply and price environment poses asignificant threat".
"That theme is ongoing due to tightness in the electricityand power market in Europe," said Xiao Fu, head of commoditymarket strategy at Bank of China International. "Market inventories have fallen to very low levels and wewould expect stocks to continue to fall in Europe." Low water levels on the Rhine were an added concern becauseshipping disruptions could further restrict metals supply, shesaid.
Dutch gas prices for September hit theirhighest since March this week, driven by a European heatwave.Hot weather increases the use of air conditioning, boostingenergy demand. Citi on Monday upgraded its zinc price forecast for the nextthree months to $3,200 a tonne from $2,800, saying it expectedconcern about an economic downturn to weigh on all base metalsprices but that zinc would outperform. "We project greater forecast cuts to European zinc smelteroutput as winter power shortages play out," Citi said in a note. LME aluminium , another energy-intensive metal, rose0.2% to $2,394.50 a tonne.
Aluminium producer Henan Zhongfu Industrial saidit was suspending production this week as China's Sichuanprovince rationed industrial electricity consumption in its mostsevere heatwave in 60 years. Among other metals, LME copper dipped 0.1% to $7,975 atonne, lead slipped 1.2% to $2,151 and tin shed0.1% to $24,695, while nickel climbed 0.9% to $22,210. For the top stories in metals and other news, click or ($1 = 6.7953 yuan) (Reporting by Eric OnstadEditing by Robert Birsel, David Goodman, Paul Simao and BarbaraLewis)
LME price overview COMEX copper futures All metals news All commodities news Foreign exchange rates SPEED GUIDES )) Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.