(Updates with closing prices, recasts)By Peter HobsonLONDON, Nov 7 (Reuters) - Zinc prices on Wednesday fell to aseven-week low on expectations that a supply crunch will ease.
Benchmark zinc on the London Metal Exchange (LME)closed down 1.8 percent at $2,455 a tonne after touching $2,445,the lowest since Sept. 21.
"Smelter margins in China are picking up and the expectationis that production is set to trend higher into year-end," saidDeutsche Bank analyst Nick Snowdon.
"There has been a big build in (zinc) concentrate stocks (inChina) in the last quarter or so ... with treatment chargespicking up and prices stabilising there's a clear incentive forsmelters to ramp up output," he said.
Prices of zinc, used to galvanise steel, fell 26 percentover June-August but have recovered from August's low of $2,283.China is the biggest producer and consumer of zinc.
ZINC STOCKS: Headline inventories in the LME warehousesystem continue to fall. At 134,750 tonnes they are close to a10-year low of 131,775 tonnes reached in March.SPREAD: The premium for cash zinc over the three-monthcontract at $47.50 has eased from highs around $60 inlate October, but signals that shortages of nearby supplyremain.
DEFICIT: The roughly 13.5 million tonne global zinc markethad a deficit of 292,000 tonnes in the first eight months of theyear, the International Lead and Zinc Study Group (ILZSG) said. DOLLAR: Providing some support to metals prices was thedollar, which weakened after gains by the Democrats in U.S.elections cast doubt on further tax cuts. A lower dollar makesmetals cheaper for buyers with other currencies. CHINA: Despite fears that a U.S.-China trade dispute willundermine China's economy, exports from the country are expectedto have expanded at a healthy clip in October as businessesfrontal orders before higher U.S. tariffs set in at the turn ofthe year, a Reuters poll showed. YUAN: In a sign that authorities may be stepping upinterventions to keep the yuan from weakening, China's foreignexchange reserves fell more than expected to an 18-month low inOctober. CHINA ALUMINA: China's exports of aluminium raw materialalumina last month were roughly equal to September's bumpervolumes, the president of Aluminium Corp of Chinasaid.PRICES: LME copper closed down 0.1 percent at $6,153a tonne, aluminium finished 1.7 percent higher at$1,984.50, lead rose 1 percent to $1,927.50, tin ended unchanged at $19,050 and nickel rose 0.4 percentto $11,820.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top Base and Precious Metals Analysis - GFMS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Mai Nguyen; Editing by Adrian Croftand David Evans)