SHANGHAI, Apr 20 (SMM) – The arbitrage window for imported zinc has yet to open up despite some imported materials circulating in the market this week, SMM believed.
Small amounts of zinc imports were heard to be in the Shanghai spot market this week, including materials from Australia, South Korea, Brazil, Spain and India. Offers of these materials were 10-30 yuan/mt lower than the domestic 0# common brand.
However, imported zinc still stand to lose about 400 yuan/mt for now, according to our calculations.
We believe such loss may be cut by about 200 yuan/mt from May 1 onwards following China’s value-added tax (VAT) cut. The loss may also be reduced if imported materials can be traded at high premiums when the 0# zinc remains at a premium of over 200 yuan/mt.
However, SMM expects that it will be a challenge for spot premiums to such levels as supplies grow. Therefore, we see limited possibility of the arbitrage window opening. The small amounts of zinc imported into China are unlikely to have a major impact.
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