By Peter Hobson
LONDON, Oct 23 (Reuters) - Zinc prices rose on Wednesday as available stocks in London Metal Exchange (LME) warehouses slipped to their lowest levels in more than two decades despite expectations of increased supply.
Copper also ticked higher after protests disrupted some supply in top producer Chile.
Benchmark zinc was up 0.2% at $2,473.50 a tonne at 1425 GMT, around the highest since July and up from a three-year low of $2,190 on Sept. 3.
"The fundamental story (with zinc) is that the transition to a surplus market keeps being pushed back," ING analyst Wenyu Yao said. Before long, however, additional supply will come through and push prices lower, she added.
ZINC STOCKS: On-warrant inventories in LME-registered warehouses fell to 35,125 tonnes, the lowest since at least 1998. MZNSTX-TOTAL
SPREAD: Cash zinc traded at a $35 premium to three-month metal, up from around zero over July-September, suggesting lower availability of nearby material. MZN0-3
POSITIONING: Speculative positioning was largely flat after a bout of short covering, brokers Marex Spectron said.
FUNDAMENTALS: The global zinc market saw a 106,000-tonne shortfall over January-July, the International Lead and Zinc Study Group said this month.
COPPER: Benchmark copper was up 0.4% at $5,841 a tonne. Prices remain near last month's two-year low of $5,518, however, with gains capped by concerns that weakening global growth will restrain demand.
CHILE DISRUPTION: Antofagasta warned that unrest could lower its output by about 5,000 tonnes, equivalent to less than 3% of third-quarter production.
Codelco said one of its mines was shut and operations at a smelter drastically reduced. Union workers at BHP's Escondida copper mine downed tools on Tuesday.
FUNDAMENTALS: The International Copper Study Group said the market would return to a surplus of 281,000 tonnes in 2020 after a 320,000-tonne shortfall this year.
FREEPORT: Miner Freeport McMoRan said its copper output fell 14% in the third quarter.
NICKEL: LME nickel was 0.5% higher at $16,595 a tonne, with the premium for cash metal versus the three-month contract tumbling to $2 from more than $200 at the start of October, suggesting shortages of nearby material have eased. MNISTX-TOTAL MNI0-3
LME PROBE: The LME has asked members to report any unusual activity in nickel trading after prices lurched up and down in the wake of large transactions last week, sources said.
ALUMINIUM: Miner Rio Tinto flagged a possible pullback or closure of New Zealand's Aluminium Smelter, citing weakness in the aluminium market and high energy costs.
Tajikistan cut its aluminium output growth target for this year to 5% from 20%, a government source said.
Producer Norsk Hydro said it expected global aluminium demand growth to hover around zero this year, down from 3.1% in 2018.
OTHER METALS: LME aluminium was up 0.6% at $1,729 a tonne, lead was down 0.4% at $2,209.50 and tin was 1.6% lower at $16,580.
Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Dale Hudson