[SMM analysis] Price-locked zinc ingots are arriving in Hong Kong one after another, and imports of refined zinc rose 49.6% month-on-month in June.

SMM7: according to the latest customs data released by the General Administration of Customs, imports of refined zinc in June 2020 were 64700 tons, up 49.6 percent from the previous month and 13.7 percent over the same period last year, with a total export of 2000 tons of refined zinc, that is, a net import of 62700 tons in June 2020. Imports totaled 227800 tons from January to June 2020, down 31.9 percent from the same period last year.

According to separate customs data, the top 5 countries of refined zinc imports in June 2020 were South Korea (41.99%), Australia (30.52%), Kazakhstan (20.71%), Japan (4.67%) and India (1.54%). Among them, 80.21% of Kazakhstan is zinc.

In June, the import window was closed, the Hu-Lun ratio was further revised, and the import loss expanded to around 400 yuan / ton. however, the import volume of zinc ingots increased by nearly 50% in June against the market. We believe that there are the following reasons: first, the import window was briefly opened at the beginning of May. The previous price-locking manifests are concentrated in Hong Kong one after another; second, when the overseas epidemic is still serious, the surplus still needs to be shipped to China for digestion. Third, the supply of overseas long orders is still flowing steadily into the domestic market. In June, LME zinc inventory steadily increased to more than 120000 tons, while the LME structure changed from Back structure to Contango structure again, indicating that the current recovery process of overseas demand is slow, while domestic consumption has experienced an accelerated recovery in the previous period, the growth of new orders is weak, at the same time, under the background of large inflows of imported zinc, spot water has been suppressed. In June, domestic inventory increased by 8300 tons, and the total inventory in 7 places reached a high of more than 224000 tons. On the other hand, the inventory in the bonded area fell by only 2500 tons, and the supporting price ratio continued to be revised down from a high around 8.4 to around 8.2.

In July, the Hu-Lun ratio first rose and then suppressed, revised down again to around 8.17, and the import loss also expanded to around 450 yuan / ton. in China, consumption of die-casting zinc alloys is still in the doldrums, and it is difficult to recover in the short term. The flood situation in the south has affected terminal consumption, and the orders of galvanizing enterprises have weakened compared with the previous period, while at the same time, the output of smelters has increased by more than 20,000 tons month-on-month, under this influence. Domestic spot transactions are weak, while overseas consumption continues to rise from the freezing point, and the short-term import window is still difficult to open. Based on this, SMM expects imports to fall to about 45000 tons in July.

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