SMM analysis on China May refined zinc imports and June forecast

In May 2024, refined zinc imports totaled 44,000 mt, down 1,600 mt or 3.49% MoM, but up 147.95% YoY. From January to May, cumulative imports of refined zinc reached 187,100 mt, up 253.42% YoY. In May, refined zinc exports were 850 mt, resulting in net imports of 43,500 mt for the month.

In May, the top three sources for refined zinc imports were Australia (18,500 mt), Kazakhstan (13,100 mt), and Spain (7,900 mt). The import volume exceeded expectations, boosted by the early April opening of the import window, which increased the inflow of imported zinc and goods in bonded zones. Imports from Australia and Spain were significantly higher than expected. In terms of trade methods, 22,000 mt were from customs special supervision areas, including 13,800 mt of Australian zinc ingots, 3,100 mt from Kazakhstan, and 3,900 mt from Spain. The market anticipates further openings of the import window.

As June began, optimism in the global macroeconomic outlook waned, leading to a sharp decline in non-ferrous metal prices, including zinc. With increased production at overseas smelters and weaker-than-expected consumption, LME stock levels stabilized around 250,000 mt, reflecting weaker fundamentals support. Domestically, the issue of ore scarcity intensified, and TCs continued to fall. The transmission of ore shortages to smelter production cuts is more a matter of time, with supply remaining tight. . Consumption entered a seasonal lull, awaiting domestic policy efforts. With SHFE zinc outperforming LME zinc, the import loss is narrowing, but the import window has not yet fully opened.

In June, long-term contract inflows and the expected opening of the import window will continue to bring in refined zinc, but with a significant amount of bonded warehouse stocks, imports are expected to be around 30,000 mt.