LONDON, July 18 (Reuters) – Zinc recovered on Wednesday from this week’s one-year low, helped by falling inventories and trade buying, but other base metals stayed in the red as the dollar strengthened and trade tensions simmered. Shanghai Futures Exchange (ShFE) zinc stocks dropped by 16,919 tonnes to 58,016 tonnes last week, their lowest since February 2008, while LME zinc stocks have fallen for six straight days. “Basically the zinc market short term got oversold, so consumer buying has seen (it) rally,” said Alastair Munro, metals analyst at Marex Spectron, who said he saw more selling risk ahead for base metals near term. “People are trying to pick the lows but are getting weary of doing so. We’re macro driven, there’s uncertainty around trade tariffs and after a period where we’ve seen real money bail … what triggers the shorts to cover?”
* LME ZINC: Three-month zinc on the LME traded up 1.9 percent at $2,558.50 a tonne by 1027 GMT, adding to a 1.5 percent jump in the previous session. Zinc, which is used to galvanise steel, is down some 10.1 percent this month.
* GRAPHIC: Expectations for a rise in zinc concentrate supplies in coming years have driven down the metal price in London to one-year lows, but smelting capacity constraints suggest the sell-off is premature.
* ZINC TECHNICALS: Indicating near-term supply tightness in zinc, cash zinc was trading at a premium of $26 a tonne to the three-month price .
* COPPER: Copper was trading down 0.8 percent at $6,105 a tonne, not far off a recent one year low.
“Metals prices are still falling. Concerns that the trade dispute between the U.S. and China will escalate and fears that the economy in China is cooling are continuing to weigh on prices. In addition, prices are currently facing headwind from the firm U.S. dollar,” Commerzbank said in a note.
* MARKETS: The world’s major stock markets were mostly firmer on Wednesday as a bullish outlook from the head of the U.S. central bank buoyed the dollar, lifted bond yields and sent safe-haven gold to a one-year trough.
* VEDANTA: India’s southern state of Tamil Nadu will ask the nation’s environment court to dismiss a Vedanta Ltd petition seeking to reopen its copper smelter, a lawyer representing the state government said on Wednesday.
