SHANGHAI, Dec, 6 (SMM) --
Zinc Concentrate:
According to China Customs, zinc concentrate imports in October were 286 kt, down 31.1% MoM. YTD imports from January to October were 2.7 million mt, down 12.8% YoY.

Zinc concentrate imports have been down YoY since March, but began increasing significantly MoM in August and September 2010. SMM believes the increases were due to two factors. First, the increases in imported zinc concentrates during August and September were mainly from delivery of goods ordered in May and June. Domestic smelters aggressively purchased overseas zinc concentrate to maximize profits while LME zinc prices were low between USD 1,700-1,800/mt during May and June. These goods would only arrive in Chinese ports 2-3 months later. Second, smelters restarted production as zinc prices rose, increasing operating rates and demand for zinc concentrate. According to the SMM survey of 42 major domestic smelters regarding operations during September and October, the average operating rates were 82.1% and 82.9%, respectively, extending monthly increases begun in July.
 
Since previously ordered goods arrived in August and September, 4Q data from China Customs reflected actual import amounts. The average TC of imported zinc concentrate was around USD 120/mt in October, unfavorable for importing and also responsible for the sharp drop in imports of zinc concentrate. SMM believes zinc concentrate importers prefer spot transactions to long-term orders due to fluctuating prices, and this preference will likely result in fluctuations in the monthly imports of zinc concentrate.

Australia, Peru, and Kazakhstan were the top three suppliers of zinc concentrate during October.

Refined Zinc:
According to China Customs, refined zinc imports in October were 22.3 kt, down 23.8% MoM. YTD imports from January to October were 265 kt, down 57.9% YoY.

Refined zinc imports have fallen significantly compared to last year. Since domestic refined zinc has been in surplus for a long term, refined zinc imports depend directly on the SHFE/LME zinc price ratio.  Since the ratio has been unfavorable for imports in 2010, the volume of refined zinc imported is down significantly.  According to SMM data, refined zinc imports hit a high in March 2009 when the SHFE/LME zinc price ratio was between 8.65 and 9.83, compared to the March 2010 ratio between 7.70 and 8.39. The SHFE/LME zinc price ratio was between 7.55 and 8.10 during October this year, still unfavorable for imports.

To support industrial development in early 2009, the State Reserve Bureau (SRB) purchased significant amounts of goods for its strategic reserves, helping domestic zinc prices stabilize and make gain in a weak global zinc market. As a result, the SHFE/LME zinc price ratio was high enough to stimulate refined zinc imports. However, refined zinc imports have been falling since March 2009 as the ratio fell steadily. Since this year’s SHFE/LME zinc price ratio was low and mostly between 7.53 and 8.74, enterprises reduced imports.

During October, Kazakhstan replaced Australia as the largest supplier of refined zinc to China. 

China's refined zinc exports were 950 mt in October, down 10.6% MoM. YTD exports from January to October were 36.6 kt, up 182% YoY, and mainly to South Korea and Saudi Arabia.

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn