Analysis: Chinese zinc import to drop in Jan

SHANGHAI, Jan 29 (SMM) – China’s zinc import in January is likely to drop from levels seen in December with lower SHFE/LME price ratio and increased loss for imports, SMM believes.

Zinc import last month amounted to 100,845 mt, up over 300% from December 2016, according to customs data. China’s total zinc imports for 2017 were up 59% year on year to 674,789 mt.

Higher zinc inflows last year started in May when import arbitrage appeared. However, the window was closed in October with weaker Chinese domestic consumption and declining LME zinc inventory.

The import arbitrage remained closed as LME zinc prices continued to trade at high levels. This has led to import losses of more than 1,000 yuan/mt, SMM learned.

With Chinese domestic smelters operating normally and off-demand season kicking in in the run-up to Chinese New Year, zinc inventories have continued to grow, according to SMM data. We see downside risks ahead if more zinc is imported. 

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