METALS-Aluminium rises to one-week high as LME stocks fall

* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Updates throughout, changes dateline from BEIJING)

By Zandi Shabalala

LONDON, March 27 (Reuters) – Aluminium touched a one-week high on Wednesday as inventories fell and prices shrugged off another step towards a full restart of Norsk Hydro’s Brazil alumina operations.

Hydro said it had agreed with the Brazilian government for a third party to conduct a technical assessment on two clearances that, if confirmed, could lead to a full ramp-up in output at its Alunorte refinery.

The plant has been operating at half capacity since early 2018.

At full capacity Alunorte can produce some 6.4 million tonnes of alumina – the raw material for aluminium – or 10 percent of the world’s capacity outside China.

Uncertainty over whether Alunorte will gain final approval to restart, given a series of conflicting rulings over a lethal dam breach at miner Vale in January, is keeping prices supported, Julius Baer analyst Carsten Menke said.

“We need to be cautious in terms of regulatory aspects in Brazil at the moment considering how volatile the news flow has been around Vale, with courts allowing restarts and other courts blocking it again,” he said.

Benchmark aluminium rose 1.5 percent to $1,914 per tonne in official open outcry trading after earlier touching a high of $1,919.50.

ALUMINIUM STOCKS: Headline aluminium stocks in LME-approved warehouses fell 7,000 tonnes to 1.14 million tonnes, the lowest since mid-December. MALSTX-TOTAL

However, cash aluminium is trading at a $23.50 a tonne discount to the three-month contract, against a premium of $16.75 in December, indicating supply concerns have eased. CMAL0-3

CHINA STOCKS: In warehouses monitored by the Shanghai Futures Exchange (ShFE), aluminium stocks rose to 741,757 tonnes and are up about 10 percent this year.

“The aluminium market, in contrast to expectations about six months ago, is not tight at all,” said Julius Baer’s Menke.

“We are seeing constant record high exports from China, which is a consequence of sufficient supplies but also weak demand driven by weakness in the car sector in China.”

TRADE TALKS: The U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are expected to arrive in Beijing later on Wednesday for talks aimed at resolving a long-running trade row that has weighed on metals prices.

ZINC: The premium of cash LME zinc over the three-month contract CMZN0-3 was around $68 a tonne from $47 in the previous session as LME stocks hit a record low of 55,225 tonnes. MZNSTX-TOTAL

PRICES: Copper was bid 0.1 percent higher at $6,337 per tonne, zinc fell 0.4 percent at $2,862.50, tin was bid up 0.4 percent at $21,350, and nickel was bid 0.2 percent lower at $13,075.

Lead was bid down 0.3 percent at a fresh two-month low of $1,986 per tonne.

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