SHANGHAI, Apr. 7 (SMM) – Spot discounts on #0 zinc against SHFE 1506 zinc contract prices narrowed from RMB 150/mt to RMB 100/mt. Spot discounts contracted in the latter half of the week as spot zinc prices rose with SHFE zinc prices. Most cargo holders were bullish toward the market due to proactive purchasing by traders and so held back goods, leading to tight supply and causing price spread to narrow. Traders purchased at lows actively. Downstream buyers increased purchases but were still cautious at RMB 16,000/mt. Overall trading improved but was mainly made between traders.
Premiums on #0 zinc in Tianjin against Shanghai prices expanded from zero to RMB 10-20/mt, once expanding to RMB 30-40/mt. Some large cargo holders held onto their goods on strong prices in Tianjin. In the meantime, operating rates at galvanizers increased thanks to improving steel prices, causing zinc demand to strengthen significantly. In this scenario, traded prices climbed, with trading brisk and inventories falling noticeably.
Premiums on #0 zinc in Guangdong over Shanghai prices turned from RMB 10-20/mt to RMB 0-10/mt. Spot discounts on #0 zinc against SHFE 1506 zinc contract prices remained steady. Spot discounts of Qilin, Tiefeng and Feilong zinc against SHFE 1506 zinc contract prices were RMB 60-80/mt. Traders ramped up purchasing at lower prices, and downstream producers purchased modestly.
In China’s spot markets, downstream buyers returning from the Tomb-sweeping Day on Tuesday will replenish stocks modestly this week. Cargo holders will be reluctant to sell, which will keep supply tight and support zinc prices. Spot discounts against SHFE 1506 zinc contract prices will be around RMB 100/mt.