Zinc ore imports in January-February slightly lower than market expectations, the increase in March to be limited

SHANGHAI, Mar 31 (SMM) – China's imports of zinc concentrates in January-February totalled 679,600 mt, a decrease of 130,360 mt or 1.88% year on year. Imports of zinc concentrate totalled 410,381 mt in January and 269,378 mt in February. SMM attributed the month-on-month increase and year-on-year decrease to three factors. Australia (214,000 mt, 31.48%), Peru (158,900 mt, 23.38%) and Pakistan (51,800 mt, 7.62%) were the top three suppliers.

Long-term import orders signed by smelters from October to November last year were concentrated in arriving at ports from January to February. Imports from Australia and Peru have increased significantly, accounting for more than half of the total import orders.

Domestic mines reduced seasonally in Q1, tightening zinc ore supply. Trades in mines and transports suspended during CNY. Thus, smelters restocked cargoes for winter in advance and demand for imported zinc ore was bullish. 

Due to the current low processing fees for zinc ore, smelters were reluctant to accept it. The winter restocking fell from the previous years, resulting in year-on-year decline in imports in January-February.

Output at domestic smelters remains high levels in March while output of domestic zinc ore failed to return to normal levels. Smelters demand for zinc ore imports was bullish. Zinc prices are supported by tight zinc ore supply.

Imports of zinc ore are expected to trend higher on the month in March as the import window remains open. However, as the processing fee of imported zinc ore has fallen to $70-80/dmt, and smelters were reluctant to accept the high prices, which may result in a limited increase in imports in March. Zinc ore imports are expected to rise slightly to 280,000 mt in March.