* Zinc touches weakest in two months
* Copper slips during speech by U.S. Treasury Secretary nominee (New throughout, updates prices, market activity and comments)
LONDON, Jan 19 (Reuters) – Aluminium prices fell on Tuesday, touching their lowest in two months, as inventories and production climbed, raising fears of larger surpluses.
Three-month aluminium on the London Metal Exchange (LME) was down 0.3% at $1,966.50 a tonne by 1700 GMT after touching $1,945, its weakest since Nov. 16.
“In the short term, you have those inventory rises from both markets, China and ex-China, which is capping the upside of aluminium,” said Wenyu Yao, senior commodities strategist at ING Bank.
LME inventories MALSTX-TOTAL have jumped by 10% over the past two days to 1.41 million tonnes, while stocks in warehouses registered with the Shanghai Futures Exchange AL-STX-SGH have gained 12% over the past month.
The stock gains in China were expected ahead of the Lunar New Year holiday, which kicks off in mid-February, Yao added.
China’s aluminium production in 2020 rose 4.9% from the previous year to a record 37.08 million tonnes as smelters cashed in on soaring prices, with December output hitting a record monthly high.
Traders have been expecting LME aluminium prices to stall after they surged 44% from April last year to the highest in more than two years in December.
* LME copper prices edged down 0.1% to $7,965 a tonne as global investors absorbed a speech by U.S. Treasury Secretary nominee Janet Yellen, who urged lawmakers to “act big” on the next coronavirus relief package.
“There is an expectation that she will give some sort of endorsement to a market-driven exchange rate, which could fuel the likelihood of further dollar weakness,” Alastair Munro, of broker Marex Spectron, said in a note ahead of the speech.
* The dollar weakened, but trimmed losses as Yellen spoke. A softer dollar makes commodities priced in the U.S. currency cheaper for buyers using other currencies.
* News that China reported the worst outbreak of COVID-19 since March 2020 dampened sentiment.
* LME nickel climbed 0.9% to $18,210 a tonne, lead rose 0.9% to $2,014.50 and tin fell 0.5% to $21,140.
Zinc gained 0.2% to $2,687, erasing losses after hitting $2,667, its lowest since Nov. 17.
* For the top stories in metals and other news, click or (Reporting by Eric Onstad Editing by Barbara Lewis, David Goodman and David Gregorio)
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