Zinc Smelters Have Pessimistic Outlook

SHANGHAI, Jul.11 (CBI China) -- According to CBI's survey during the 2008 Zinc and Downstream Industry Market Forum, zinc smelters were  pessimistic with regard to the future.  72% of 200 zinc upstream and downstream producers believe zinc prices will continue to fall for the remainder of 2008, with prices fluctuating in the RMB 15 thousand-18 thousand /mt range.  54% of attendees acknowledge that China's structural inflation and rising raw material prices will increase production costs and reduce profit margins, but 42% of attendees believe these factors will support  zinc prices. 

    Since traders were anxious to generate cash flow, imports of zinc ingot exceeded 19 kt during May.  As for the issue of growing imports, smelters said the imported goods had only a limited impact on them, as imported zinc ingot enjoyed no advantages in quality, and they believed imports would continue as long as the channel was profitable.

    With regard to domestic zinc supply, much new zinc capacity was added in China during 2008-2009.  The attendees said there were many uncertainties, and the latest round of capacity expansion not likely be repeated under current consumption and market performance, and that it was possible for some new capacity to delay production or run at low operating rates once commissioned.