* LME/ShFE arb: LME zinc stocks up nearly 60 pct since March 3
* Nickel hits two-week high above $14,000/T (Adds news of industrial action and closing prices)
By Pratima Desai
LONDON, March 14 (Reuters) - Zinc prices slipped on Wednesday as inventories in London Metal Exchange-approved warehouses climbed, but support came from expectations of stronger demand in top consumer China.
Benchmark zinc CMZN3 on the London Metal Exchange closed down 1.8 percent at $3,226.5 a tonne. Prices of the metal used to galvanise steel are down about 10 percent since hitting $3,595.50 on Feb. 15, their highest level since July 2007.
"There is a shortage of galvanised steel in China. There should be a big restock in the second quarter," said Macquarie analyst Vivienne Lloyd, adding that the zinc market this year would see a 500,000-tonne deficit.
"China's steel industry was impacted by the winter cuts, production was weak and some operations had to close."
STOCKS: Stocks of zinc in LME warehouses have jumped nearly 60 percent since March 3 to 207,775 tonnes. Cancelled warrants - material earmarked for delivery and so not available to the market - account for about 8 percent of stocks, down from nearly 50 percent at the start of March. MZNSTX-TOTAL
CHINA: The country accounts for about half of global zinc demand, estimated at 14.4 million tonnes.
SPREAD: Greater availability of zinc on the LME market has seen the premium for the cash contract over the three-month forward - above $55 a tonne at the end of January - slide into a discount around $3.5 a tonne. MZN0-3
MINERS: "Higher zinc prices have helped miners' profit margins, and this should work as an incentive to miners to speed up their pipeline of projects or restart idled operations," GFMS analysts said in a note.
"However, it is 'too little, too late' to fill the concentrate supply gap that we forecast in 2018."
CONCENTRATE: Traders are watching treatment charges for zinc concentrate. Sliding treatment charges suggest less availability of concentrate, while a rising number would mean surpluses.
NICKEL: The stainless steel ingredient CMNI3 was untraded at the close, but bid 0.3 percent lower at $13,835 a tonne. It earlier hit a two-week high at $14,030.
NICKEL STOCKS: Concern about shortages on the LME market have been fanned by a 10 percent fall in stocks since Jan. 10 to 325,434 tonnes and cancelled warrants rising to 39 percent from 30 percent. MNISTX-TOTAL
COPPER: Prices were supported by news of industrial action at First Quantum's FM.TO Cobre Panama project, "which has reduced the level of work being performed on the project", the company said in a statement. Copper ended up CMCU3 0.6 percent at $6,987 a tonne, aluminium CMAL3 lost 0.7 percent higher at $2,089, lead CMPB3 gained 0.6 percent to $2,404 and tin CMSN3 slipped 0.1 percent to $21,150.