2011 February Zn Imports and Exports Data Analysis

SHANGHAI, Mar. 28 (SMM)--

Zinc concentrate:
According to nonferrous metals imports and exports data from China Customs, domestic zinc concentrate imports for February were 208.7 kt, down 29.6% MoM. YTD zinc concentrate imports from January to February were 505.2 kt, down 23.98% YoY.

Since TC for long-term contract for 2011 fell, zinc concentrate imports face more downward pressure. Zinc concentrate imports were down significantly in February due to the low spot TC. According to SMM statistics, the average TC during February 2010 was USD 190/mt, compared to USD 125/mt in February 2011. As a result, zinc concentrate imports fell to 208.7 kt, down 35.9% from January’s 325.4 kt.

According to listed company annual reports, profits were seriously affected by rising raw material prices during 2010. Since raw material prices rose faster than prices for zinc products,  a large number of enterprises showed slowing profit growth, with some even posting losses. Most of the enterprises in this category purchase zinc concentrate overseas using long-term contracts with foreign mines, but with some purchases of spot zinc concentrate as well. Since TC for both long-term contracts and spot zinc concentrate is down, rising costs for raw materials has become the major factor deciding profitability at enterprises.

According to zinc concentrate inventory data at some enterprises, inventories at zinc smelters during 2010 were general sufficient, which allowed them to purchase less zinc concentrate than planned and help reduce the impact of rising raw material prices. SMM believes those zinc concentrate inventories were purchased during 2009, and the financial situation for enterprises without self-owned mines will become serious once those inventories are consumed.

Domestic zinc concentrate imports were mainly from Australia and Peru, which accounted for 62.68% of total imports during February.

Refined zinc:
Domestic refined zinc imports during February were 16.8 kt, down 48.45% MoM. YTD imports from January to February were 495.1 kt, down 23.98% YoY.

The SHFE/LME zinc price ratio was 7.63 during February 2011, down from 7.77 in January, and down sharply from a ratio of 8.23 in February 2010. Refined zinc imports were down since the low SHFE/LME zinc price ratio significantly cut into profits of importers. The majority of refined zinc imports during February were from Kazakhstan and Peru.

Refined zinc exports during February were 955 mt, down 57.13% MoM. YTD exports from January to February were 3,316 mt, down 78.7% YoY, with exports mainly sent to Saudi Arabia, Indonesia, India, and Malaysia.

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