SHANGHAI, Apr. 22 (SMM) – Last week, spot zinc prices gains were greater than gains in SHFE zinc prices, with spot discounts for #0 zinc against SHFE 1406 zinc contract prices narrowing by RMB 60/mt, to RMB 0-20/mt, and with #0 zinc prices between RMB 14,880-15,040/mt. Spot zinc prices continued to rise and spot discounts narrowed further, and premiums at one point hit RMB 20/mt against SHFE 1406 zinc contract prices. As zinc prices climbed, smelters were actively selling goods, but since a large number of smelters were conducting maintenance and others were holding back goods, some brands were in short supply. Some traders began to sell off goods, but others were unwilling to move goods. Most downstream enterprises took a wait-and-see attitude after spot zinc prices fell below RMB 15,000/mt, and despite soft demand, supply was still considered tight.
Last week, prices in Guangdong were RMB 20-50/mt below Shanghai prices, with the price spread expanding by RMB 10/mt from the previous week. Supply was tight due to maintenance at some smelters, with downstream buyers purchasing on an as-needed basis at RMB 15,000/mt. Price increases in Tianjin were less than gains in Shanghai, with the price spread between #0 zinc in Tianjin and Shanghai expanding to RMB 50/mt. Prices for Huludao branded #0 zinc produced on older production lines were raised by RMB 210/mt, to RMB 15,710/mt.
Spot supply has been tight due to ongoing maintenance at some smelters but as zinc prices climb above RMB 15,000/mt, cargo holders and smelters will actively sell goods. Downstream buying interest will fall, however, as prices continue to rise. As spot supply tightness eases, spot discounts against SHFE 1407 zinc contract prices should be around RMB 50/mt.