SHANGHAI, Jun. 21 (SMM) - Spot premiums on #0 zinc in Guangdong shrank 60-70 yuan per tonne from June 19 to 670-730 yuan per tonne on June 20, and narrowed 90-110 yuan per tonne from last Friday, SMM data showed. #0 zinc traded between 22,550-22,620 yuan per tonne June 20.
What have pushed down Guangdong’s spot premiums?
SHFE zinc posted a 5-day winning streak. High zinc prices incentivized zinc smelters to sell actively. The goods releases after delivery under warrants and influx of imported zinc also added to supplies, SMM explained.
Meanwhile, traders also liquidated inventories at the month-end because of settlement and cash tightness, growing goods available.
But downstream buying interest was weak against high prices. Operating rates at die-cast zinc alloy producers averaged 59.5% in May, down 2% from April, SMM survey showed. The average rate is expected to fall further to 59.17% in June. Sluggish demand dented zinc consumption.
Zinc spot premiums in Guangdong may narrow further next week, SMM predicts. Supplies from traders will increase at the month’s end, while consumption will remain soft.
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