Metals News
Why Price Spread between #0 and #1 Zinc Expands Remarkably? SMM Reports
smm insight
Jun 23,2017

SHANGHAI, Jun. 23 (SMM) - The price spread between domestic #1 and #0 zinc expanded from 50 to 200 yuan per tonne in mid-June (The data did not cover Shuangyan zinc. Factoring in Shuangyan zinc, the price gap has widened to over 300 yuan per tonne), SMM data showed.

Why did the price gap between #1 and #0 zinc stage such wide expansions?

#1 zinc supply increased after zinc smelters restarted production from maintenance, SMM understands. Production at some zinc smelters, including Western Mining and Sichuan Sihuan, recovered in mid-to-late June.

LME Zinc Outshines Other Nonferrous Metals - Here’s Why, SMM Reports

Besides, influx of imported zinc weighed down prices for domestic brands, SMM said. The opening of import profit window attracted more inflows of imported resources in Shanghai and Guangdong over the past two months. In this scenario, the price spread between imported #0 zinc and domestic resources expanded from 50-100 yuan per tonne in late May to 150-200 yuan per tonne, which reached over 300 yuan per tonne in mid-June. Imported zinc is more popular with downstream buyers because of price advantage. Domestic zinc prices were thus weighed.

Where is Zinc Contango Going? SMM Analysis

The price spread between domestic #1 and #0 zinc will stay around 100-250 yuan per tonne in the near term, SMM predicts, citing imported zinc supplies and more output from smelters in June. 

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