China Refined Zinc Imports Fell in December 2022, and Likely to Extend Decline in January

SHANGHAI, Feb 14 (SMM) - According to customs data, China imported 7,900 mt of refined zinc in December 2022, down 31.79% MoM and 23.24% YoY. The imports totalled 79,200 mt last year, a drop of 81.76% YoY. The exports stood at 570 mt in December 2022. Thus, the net imports came in at 7,300 mt.

The top three suppliers in December 2022 were Myanmar (2,500 mt), Australia (2,300 mt), and Kazakhstan (2,300 mt). The import window was closed as LME zinc outperformed SHFE zinc, leading to a month-on-month decline in December’s imports. The export window had been shut down for a prolonged period of time, resulting in scarce export volume.

The US core PCE Price Index rose 0.3% month-on-month and 4.4% year-on-year in December 2022, the smallest increase since October 2021. Improving US inflation and employment data buoyed LME zinc. In terms of fundamentals, the possibility of European zinc smelters resuming their production is low in the short term as they still suffer losses, even after electricity prices had dropped. LME zinc inventory kept falling. Spot premiums in the European market expanded.

With the arrivals of imported zinc concentrates, domestic smelters’ raw material inventories increased to 30 days. Zinc concentrate inventory at Lianyungang port stood at a historical high of 140,000 mt. Abundant zinc ore supply and high TCs boosted smelters’ production enthusiasm in January, but downstream consumption declined due to the CNY break.

The SHFE/LME zinc price ratio slipped to around 7.1, expanding import losses to above 3,500 yuan/mt. The import window looks unlikely to open any time soon. Coupled with the CNY holidays, SMM estimates that China’s refined zinc imports might have fallen in January.