China Customs reported that China imported 160,300 mt of zinc concentrate in April, up 116% MoM, and up 29.5% YoY. YTD imports through April were 580,000 mt, down 11.35% YoY.
Zinc imports soared to a high in April due mainly to steady demand and import profits.
Although zinc prices remained weak at the end of Q1, a recent SMM survey shows the average operating rate at domestic smelters remained high at 73%, with only a small number of enterprises cutting or suspending production.
Meanwhile, the SHFE/LME zinc price ratio rose to 7.9 in mid-April, and importers did not lower TC. SMM understands import TC in Q1 was concentrated between USD 125-135/mt, flat with early this year. As a result, domestic smelters interest in purchasing imported ore strengthened.
India was the largest supplier with 54,400 mt. Imports from Australia were 52,500 mt.
The SHFE/LME zinc price ratio in May remained profitable, but since demand for zinc concentrate was refrained by increasing smelters cutting or suspending production, import growth should be limited.
China's refined zinc imports during April were only 44,800 mt, down 39% MoM, but the decline is more a reflection of the high volume of zinc imported in March. April imports were still relatively high compared to last year, growing 54% YoY. YTD imports through April were 188,500 mt, up 17.8% YoY.
April's high zinc imports were mainly attributable to a continuously rising SHFE/LME zinc price ratio. SMM data shows the ratio has been increasing from 7.6 in mid-March to 7.8 in mid-April, which allowed import losses to narrow. Strong demand for zinc ingots also gave importers more incentives to import as well, but SMM attributes the sharp decline in imports compared to March to rising import premiums.
Import premiums hovered around USD 120/mt during February and March, but jumped to USD 140-150/mt in early April. Tighter regulations for L/Cs issued for financing trade also negatively affected refined zinc imports.
Australia remains China's largest supplier with 14,303 mt. Import volumes from Peru, Spain, South Korea and Japan all exceeded 2,000 mt.
The SHFE/LME zinc price ratio has been fluctuating at high levels since April and import premiums have now stabilized, so SMM anticipates refined zinc imports will remain high in May.