SHANGHAI, Apr. 16 (SMM) – 75% of major Chinese zinc smelters were neutral towards zinc price outlook, according to the latest SMM survey.
Three quarters of smelters contacted by SMM believed LME zinc prices had little room to rise. China’s manufacturing PMI in March was downbeat, but European and US major economic data were positive, limiting zinc price volatility.
Although zinc supply in physical markets remained tight, mild downstream demand would leave little support to zinc prices, leading most smelters to believe prices might only hold steady for the near term, resisting both increases and declines.
25% of smelters, however, were still optimistic. Chinese government rolled out a series of stimulus policies including preferential tax policies for small and mini enterprises, low-income housing construction and railway investments hike. 6,600 km new railway lines were planned to be put into utilization this year, up 1,000 km from last year, and 80% of which would be constructed in central and west China. The pro-growth measures were expected to boost industry metal demand.
Total zinc inventories in Shanghai, Guangdong and Tianjin markets slid for four consecutive weeks, according to SMM data, an indication that downstream demand improved in March and looked set to continue growing in April. The Canton Fair scheduled to kick off April 15 might also boost operating rates at downstream producers, in turn benefiting zinc prices.
LME zinc prices rose 3.95% in March. The average SMM #0 zinc price was down 246.93 yuan per tonne to 14,746.19 yuan per tonne in March.