Refined Zinc Imports Plummeted in July, Will They Remain Low in August? [SMM Analysis]

According to the latest customs data, refined zinc imports in July 2024 were 18,500 mt, down 16,500 mt MoM or 47.17% MoM, and down 75.97% YoY. From January to July, cumulative refined zinc imports were 240,500 mt, up 37.36% YoY. Refined zinc exports in July were 2,700 mt, resulting in net imports of 15,700 mt.

The top three sources for refined zinc imports in July were Kazakhstan (8,500 mt, 46.04%), Australia (6,300 mt, 34.00%), and Iran (1,600 mt, 8.67%), but overall imports saw a significant MoM decline. With the SHFE/LME price ratio correction at the end of July, the import window opened. However, the high inventory in domestic bonded zones led to a predominance of bonded zone outflows. Additionally, the actual import window was narrow, with long-term contracts dominating and only a small amount of tax-free brands being imported in spot orders, resulting in a noticeable decline in overall import volumes.

Entering August, the domestic supply shortage has not eased, zinc concentrate TC continues to decline, and raw material inventories at smelters have dropped to less than 14 days. This raw material shortage has led to increased production cuts at smelters, with July output of smelters falling to 489,600 mt. There is a possibility of further output declines in August. Although consumption is currently in the off-season, the domestic supply side strongly supports zinc prices. International conflicts and poor economic data have increased recession fears, causing LME zinc to perform weakly. Although recession fears have recently eased, high LME inventory levels continue to pressure LME zinc prices. Overall, with SHFE zinc outperforming LME zinc, the SHFE/LME price ratio has somewhat corrected. It is expected that the refined zinc import window will intermittently open in August. Considering the significant decline in bonded zone inventories, domestic imports are not expected to increase significantly, with an estimated imports of around 25,000 mt.