SHANGHAI, Jun 30 (SMM) — China imported 57,500 mt of refined zinc in May, up 32.95% on the year and 41.07% on the month, the latest customs data showed. Exports stood at 500 mt. This left a net import of 57,000 mt. The imports totalled 231,600 mt in January-April, a year-on-year increase of 46.51%.

The top 5 supply countries in May were Kazakhstan (38%), Australia (30.4%), South Korea (19.8%), UAE (5.4%) and Peru (2.6%). Imports from Kazakhstan and South Korea increased from the previous month in May. Australia saw the most significant increase. The import loss in May recorded more than 400 yuan/mt. Part of the non-profit long-term orders and a large amount of price-locked cargoes have been declared, resulting in a significant increase in overall imports.

The Fed released a hawkish signal at the June meeting on interest rates. The current inflation level has increased and interest rate will be increase twice before the end of 2023. Policy tightening may come earlier, thus, the US dollar has risen sharply and non-ferrous prices fell. LME zinc stocks fell to 260,000 mt, indicating a recovering end consumption. LME cash-to-three-month backwardation shrank to $11/mt. Market supply showed a recovery growth as zinc smelters resumed production earlier than previously expected in Yunnan. The State Bureau of Grain and Material Reserves will release copper, aluminium, zinc and other national reserves in batches in the near future, pressuring on domestic zinc prices. However, the current lower inventories also supported spot premiums and SHFE/LME price ratio rose amid rising demand for imported zinc. 

Import volume needs to be boosted by long-term orders as import window remained closed. Refined zinc is expected to decline 46,000 mt on the month in June. Demand for imported zinc is expected to be limited in July as output at domestic smelters increased and cargoes stockpiled by government entered market. Refined zinc imports are likely to fall to 40,000 mt in July.