Buying Interest Remains Low Despite Falling Zinc Prices

SHANGHAI, Jun. 20 (SMM) – According to SMM’s survey, enterprises downstream remained unwilling to purchase although zinc prices kept falling during May. Nearly 60% enterprises only purchased as needed and were not intended to stock up on raw materials, while the remaining 40% limited their inventories to 100-300 mt.

SMM has been informed that four reasons may explain the low buying interest. First, some enterprises were bearish on zinc market outlook, believing zinc prices will be pulled down due to tight finances and weak market fundamentals against the global economic downturn, so these enterprises were not eager to build up inventories. Second, several of downstream enterprises had trouble receiving payments from end users, causing financial pressures which discouraged them from buying raw materials. Third, poor orders also kept enterprises cautious while purchasing. Finally, purchases for zinc ingot abated at enterprises recycling scrap materials for saving costs.

Downstream enterprises still bought zinc on an as-needed basis during June and only increased purchases moderately when zinc prices fell. With demand in end market weakening during off-season, SMM expects purchases from downstream buyers tend to be more cautious.