* Zinc falls to lowest since June 2016 * Nickel sinks to seven-month low * Copper, aluminium at weakest in about two weeks * Aluminium has biggest short position on LME -broker (Updates with closing prices) By Eric Onstad LONDON, Feb 24 (Reuters) - Zinc hit its lowest level sinceJune 2016 on Monday and other industrial metals prices alsoslumped on fears the spread of the coronavirus outside Chinawill further hit global growth and metals demand. Sharp rises in new cases reported in Iran, Italy and SouthKorea triggered steep falls in Asian shares and Wall Streetstock futures. "It's a wave of uncertainty back in financial markets, whichis pulling prices lower today. It's a clear risk-off move," saidanalyst Carsten Menke at Julius Baer in Zurich. "With the news over the weekend, it seems the financialmarkets are struggling again how to properly price in theeconomic implications of this virus. I think we need more timeuntil we figure out how to do this." Three-month zinc was the hardest hit on the LondonMetal Exchange (LME), sliding 3.3% to $2,046 a tonne in finalopen-outcry trading, its weakest level since late June 2016.
* ZINC STOCKS: Rising supply also weighed on zinc priceswith inventories surging recently. LME levels have jumped 52% over the past three weeks and those inwarehouses tracked by the Shanghai Futures Exchange hit a near two-year high of 143,164 tonnes on Friday. "Inventories are likely to rise further while supply chainsremain disrupted and some manufacturers have still not resumedproduction," Commerzbank said in a note, referring to copper andaluminium stocks as well.
* ZINC SPREAD: The discount of LME cash zinc to thethree-month contract rose to $19 a tonne, the highestsince September 2018 and up from a premium of $16.75 at the endof January. This indicates rising supplies in the LME system. * ALUMINIUM SHORT: The net speculative short position foraluminium is the largest on the LME, expanding to 16% of openinterest by last Thursday, according to estimates from MarexSpectron. This compares with the year-to-date peak of 27% ofopen interest on Feb. 4, the broker added in a note.
LME aluminium fell 0.9% to close at $1,699, thelowest since Feb. 5. * ALUMINIUM COLUMN: The outbreak of the deadly coronaviruscould not have come at a worse time for the aluminium market,says columnist Andy Home.* NICKEL: "Stainless steel mills have started to reduceproduction due to transportation bottlenecks for raw materialsand mounting inventory pressure," Citi said in a note.
Stainless steel is the biggest end user of nickel. * PRICES: LME copper shed 1.3% to finish at $5,689 atonne after touching a two-week low of $5,671.50 while nickel slipped 0.8% to $12,430, the weakest since July lastyear. Lead dropped 0.6% to $1,820 and tin fell0.5% to $16,550. * For the top stories in metals and other news, click or <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^LME, ShFE Zinc Stocks Surge ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Eric Onstad; editing by Jason Neely and DavidEvans)
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