SHANGHAI, Jan 4 (SMM) – China’s imports of refined zinc in November 2022 stood at 11,600 mt, a month-on-month increase of 1,054.62%, but a year-on-year decrease of 44.77%. From January to November 2022, the cumulative imports of refined zinc were 71,300 mt, a year-on-year drop of 83.18%. Total exports of refined zinc stood at 1,900 mt, with net imports of 9,800 mt in November 2022.
The top three suppliers in November were South Korea (4,700 mt), Kazakhstan (4,500 mt) and Myanmar (1,200 mt). In November 2022, the domestic import volume rose sharply month on month, while the export volume returned to a low level. The import window partly opened, which drove inflows of overseas brands such as KZ, AZ, and Kazakhstan zinc. The imports of Kazakhstan zinc will gradually resume in the foreseeable future. In terms of export, exports from goods in bonded areas (including pilot areas under customs supervision) decreased as the export window closed, resulting in a significant decline in export volume.
In December, the Federal Reserve’s hawkish speech combined with the poor performance of US real estate data as well as the rebounding US dollar weakened overseas sentiment over macroeconomy. Fundamentally, both supply and demand are weak currently. Natural gas inventories in Europe declined recently, and wind power generation will decline in the first quarter. The cold winter may increase local natural gas consumption in Europe. In this scenario, output cuts and production suspension are likely to be extended in Europe. This has prevented LME inventories from accumulating, and the supply side has supported LME nickel prices.
On the consumption front, the market shall pay attention to whether the overseas interest rate hike will have a greater impact on economic activities, which will thereby lead to further weakening of consumption and push down LME zinc prices from high levels. There has been no significant change on China's domestic supply side. Treatment charges of zinc concentrate continued to rise. The production of smelters is basically normal. The major change is seen in transportation. Although the domestic COVID-19 control has been relaxed, the transportation time has been prolonged as the number of working drivers decreased amid increasing domestic infections. This prevented stock accumulation. Meanwhile, a growing number of downstream enterprises halted production due to growing infected employees. As the impact of the COVID-19 pandemic is gradually expanding, consumption has continued to weaken. The change of the supply and demand structure kept zinc prices at lows even as social inventories remain at low levels.
On the whole, higher supply and weakening demand, coupled with the negative impact from China's reopening will accelerate the weakening of consumption in December. The support from the supply side helped LME zinc prices outperform SHFE zinc, lowering the SHFE/LME zinc price ratio to around 7.8. The import losses stood at around 1,500 yuan/mt, keeping the import window closed. There will be inflows of Kazakhstan zinc in the near term. Imports of refined zinc in December 2022 are expected to be lower than in November. Exports will continue to be low as the export losses are estimated at around 2,500 yuan/mt.
![Pre-holiday stockpiling consumption was moderate; SHFE zinc consolidated on a subdued note [SMM zinc futures review]](https://imgqn.smm.cn/usercenter/PEqzX20251217171755.jpg)
