Shanghai zinc caps best month since January on tight supply

Hawkish interest rate comments from U.S. Federal Reserve Chairman Kevin Warsh are exerting downward pressure on copper prices, analysts from Chinese broker Galaxy Futures said in a note.

Traders on Sunday priced in a 60% chance that the Fed would raise rates at its September meeting, up from 40% a week earlier, according to the CME's FedWatch tool.

Higher-for-longer rates are a concern to growth-dependent commodities like copper as they can dampen economic activity.

Data on Friday showed total copper stocks in SHFE-monitored warehouses were down more than 19% last week, with on-warrant stocks - metal not already marked for withdrawal - standing at 31,462 tons.

Among other SHFE metals, aluminium gained 0.61%, lead gained 0.8%, nickel lost 0.94% and tin lost 0.71%.

Shanghai zinc gained on Monday, supported by supply tightness outside China, to cap its best month since January.

The most-traded zinc contract on the Shanghai Futures Exchange rose 1.66% to 26,710 yuan ($3,975.35) a metric ton by 0715 GMT. That took its August gain to 5.57%, the biggest monthly rise since January for the metal, which is used mainly to galvanise steel.

A zinc supply squeeze outside China is incentivising exports from warehouses in China.

"Stockpiles of zinc [in] LME warehouses are down more than 20% over the past two months," said Daniel Hynes, senior commodities strategist at ANZ. "Disruptions to mines have led to smelter treatment charges falling as low as negative USD110/t."

The London Metal Exchange was closed on Monday for a public holiday in Britain but zinc prices there touched a four-year high on Friday.