China Zinc Concentrate Imports Soared in First Two Months of 2023, Three Reasons Drove the Surge

According to customs data, China imported 431,200 mt (physical content) of zinc concentrates in January and 471,100 mt (physical content) in February. YTD imports through February stood at 902,300 mt (physical content), up 30.08 percentage points MoM.

Imports from Australia were 102,000 mt in January, accounting for 23.66% of the total zinc concentrate imports, and were 137,500 mt in February, accounting for 29.18%, making the country top supplier. Imports from Peru were 78,800 mt (18.52%) in January, and 73,000 mt (15.49%) in February, ranking second. SMM attributes the month-on-month import growth to the following factors.

1. The production in Europe has not yet fully resumed, and overseas zinc concentrate supply was still ample in January and February, driving inflows of zinc concentrate into China;

2. With high profits, smelters were basically producing at full production or even over capacity, and the demand for ore thus strengthened. Domestic ore supply was affected by the seasonal factor. This also led to stronger demand for overseas ore.

3. High imported zinc concentrate TCs gave an advantage to imported ore.

Entering March, the supply from overseas mines was expected to decrease due to production resumptions at overseas smelters. Therefore, some traders lowered the TCs of imported ore in anticipation of a decrease in long-term supply, resulting in a reduction in the profit of imported ore.

However, some mines in north China have not yet fully resumed production, and operating rates of domestic smelters remain high. In this scenario, the supply of domestic and overseas zinc concentrate remains in shortages.

Given domestic zinc concentrate TCs falling faster with imported zinc concentrate TCs, smelters will not prefer domestic zinc concentrate. The zinc concentrate imports will stay at a high level in March.