Spot #0 zinc was quoted with premiums of 130-270 yuan/mt over SHFE 2308 zinc contract last week, and discounts in Guangdong stood at 110-180 yuan/mt against Shanghai prices. Shipments arrivals fell last week from the prior week. But downstream companies purchased as needed, limiting inventory declines. Social inventory in south China was at a high level.
The inventory pressure resulting from poor downstream consumption, combined with the narrower price spread between the SHFE front-month and SHFE next-month zinc contracts, prompted sellers to lower their quotes. Spot premiums thus plunged and moved into discounts at one point against the SHFE front-month zinc contract. Trades among traders were relatively brisk. Spot premiums will strengthen this week.
