SHANGHAI, Mar. 19 (SMM) – The spot zinc market improved last week. As SHFE zinc prices fell in early week trading, spot discounts against SHFE 1405 zinc contract prices narrowed from RMB 200/mt two weeks ago to RMB 100/mt, causing traders to sell goods and increase market supply. Some downstream enterprises entered the market at lower prices, but smelters began holding back goods due to falling zinc prices. #0 zinc prices stabilized between RMB 14,700-14,800/mt later in the week, with spot discounts against SHFE 1405 zinc contract prices around RMB 100/mt, and with discounts over RMB 100/mt for Jiulong and Qinxin branded #0 zinc. Downstream buyers remained cautious, however, leaving transactions relatively stable.
Trading in Guangdong province was steady last week, with #0 zinc prices RMB 10-30/mt below Shanghai prices, but on par with Shanghai prices from two weeks ago. Spot demand in Tianjin remained soft, with downstream enterprises mostly purchasing on an as-needed basis. Some smelters were holding back goods due to falling zinc prices, causing supply to decrease. The price spread for #0 zinc between Tianjin and Shanghai markets narrowed from RMB 80/mt two weeks ago to RMB 60/mt, since prices in Tianjin were down less than losses in Shanghai. Prices for Huludao branded zinc produced on the older production lines fell by RMB 220/mt, to RMB 15,280/mt.
Domestic smelters will hold back goods as zinc prices move lower, and when combined with low imported zinc volumes, spot supply will decrease. Downstream buyers will purchase more actively as zinc prices bottom out, with spot discounts against SHFE 1405 zinc contract prices expected around RMB 100/mt.