SMM Analysis: Imports of Zinc Concentrates Declined Greatly in Feb with Slight Changes in March

SHANGHAI, Mar 20 (SMM) - According to customs data, China imported 265,269 mt of zinc concentrates in February, down 38.07% or 163,097 mt MoM, down 1.53% on the year. Imports of zinc concentrates totalled 60,000 mt from January to February, a year-on-year decrease of 4.57%.

SMM Analysis of the reasons that the imports of zinc concentrates in February fell on the year as follow: By country, imports from Australia were 57,700 mt in February, accounting for 21.8% of the total imports, ranking the first. Imports from Peru were 57,200 mt, accounting for 21.6% of the total imports, ranking the second. Imports from South Africa were 25,800 mt, accounting for 9.7% of the total imports, ranking the third.

First, from the data of import destination in February, the imports in places such as Australia and South Africa have declined in varying degrees, while the import volume of Russia and Peru had increased.

Second, the import losses were slightly made up, but still at a relatively high level. Although TCs rose slightly, the losses would expand if the domestic smelters chose to purchase imported ore as the SHFE/LME price ratio was at a relatively low level, and smelters’ demand for overseas ore would drop to the bottom.

Third, because of the price sharing mechanism between domestic mines and smelters, smelters were more inclined to purchase domestic ore and less dependent on imported ore. It also caused TCs of domestic zinc concentrate to go further down to 3,800-4,000 yuan/mt (metal content).

Fourth, due to the long-term orders of domestic smelters signed in October and November last year, which mostly arrived in January 2022, the imports in January increased. In February, in the case of large SHFE/LME price ratio, smelters were less likely to sign bulk orders, resulting in a serious decline on the month. In February, TCs of imported zinc concentrate rose to $130-150 dmt, but under the impact of price ratio, more smelters chose to purchase domestic ore, while the demand for imported ore remained unchanged. Under the influence of Chinese New Year holiday in February, SMM expects that the imports of zinc concentrate are around 300,000 mt in March.