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Zinc gains on potential for further smelter shutdowns

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LONDON — Zinc prices climbed on Friday, lifted by fears of further smelter closures owing to high power prices, while other metals gained after better than expected Chinese factory data.

Three-month zinc on the London Metal Exchange (LME) advanced 1.9% to $2,986 a tonne by 1010 GMT.

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“The supply side has really deteriorated in zinc, which is one of the few metals that has quite a big production base in Europe,” said Caroline Bain, chief commodities economist at Capital Economics.

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“It has been particularly hard hit by closures and I think there’s probably more to come on that front.”

Soaring electricity prices in Europe have also triggered cuts in energy-intensive production of aluminum.

Other metals prices gained after factory activity in top metals consumer China expanded unexpectedly in September, returning to growth after two consecutive months of contraction.

“The improved data buoyed market confidence,” said a Chinese copper tube producer source who expects rising demand and tight inventories to remain in the coming month.

LME copper added 0.7% to $7,595 a tonne but is set to end the quarter with a loss of about 8%, pressured by dollar strength while the U.S. Federal Reserve raised interest rates and China grappled with COVID-19 shutdowns.

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Also supporting the market was data showing copper inventories in warehouses monitored by ShFE fell to 30,459 tonnes on Friday for their lowest since Jan. 21 and down 54.3% from 66,661 tonnes on Jul. 1.

A possible LME ban on Russian metal including nickel, aluminum and copper further exacerbated supply concerns.

LME aluminum rose 0.8% to $2,215 a tonne, lead gained 0.5% to $1,886, nickel was up 1% at $22,560 and tin rose 1.3% to $20,780.

For the top stories in metals and other news, click or ($1 = 7.0951 Chinese yuan) (Reporting by Eric Onstad Additional reporting by Siyi Liu and Dominique Patton Editing by David Goodman)

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