SHANGHAI, Jun. 23 (SMM) – In China's spot markets, spot discounts of mainstream registered #0 zinc brands remained between RMB 50-90/mt against SHFE 1408 zinc contract prices. After SHFE zinc prices jumped on Friday, spot discounts expanded further to RMB 100-140/mt. Goods arriving were limited since some smelters had conducted maintenance, but imported zinc supply was ample. Volatile zinc prices stimulated traders to sell aggressively, but downstream buying interest was low due to high zinc prices, environmental protection inspections, weak downstream orders, and tight cash flows. As a result, overall transactions were muted.
Last week, zinc price gains in Tianjin were not as strong as those in Shanghai market, with #0 zinc prices in Tianjin turning from RMB 40/mt below Shanghai prices early in the week to RMB 80/mt below. The price spread narrowed from the previous week, but was still greater than the average of RMB 40/mt since May. Supply from Zijin Mining was limited, but other cargo holders sold goods actively due to continuously rising zinc prices. Downstream buying interest, however, was weak due to sluggish downstream orders and environmental protection inspections in Hebei province, which weighed on zinc prices and left transactions muted.
Zinc prices in Guangdong continued to move higher last week, but with the price spread between Guangdong and Shanghai remaining between RMB 40-80/mt. Inventories in Guangdong grew due to sufficient supply and the inflow of imported zinc. Some smelters were actively selling goods due to rising zinc prices, and sharp zinc price fluctuations gave incentives to traders, but downstream buyers mainly took a wait-and-see attitude, leaving transactions mainly among traders.
On the spot side, goods arriving will be limited due to ongoing maintenance at producers of Yuguang and Qinxin branded zinc, but production restarts at producers of Shuangyan branded zinc, combined with the inflow of imported zinc, will keep spot supply sufficient. Spot demand will unlikely improve due to the onset of low-demand season for zinc and high zinc prices, with spot discounts of #0 zinc against SHFE 1409 zinc contract prices expanding to RMB 200/mt.