[SMM analysis] imports of refined zinc continue to be low in April 2020 and may increase slightly in May.

SMM5 March 28:

According to the latest customs data released by the General Administration of Customs, 32800 tons of refined zinc were imported in April 2020, down 57.74 percent from the same period last year. A total of 2900 tons of refined zinc were exported, that is, a net import of 29800 tons in April 2020. Imports totaled 129500 tons from January to April 2020, down 40.65% from the same period last year.

According to customs data, the top 5 countries importing refined zinc in April 2020 were Kazakhstan (54.61%), South Korea (23.68%), Australia (10.4%), Iran (6.24%) and Peru (6.52%). Among them, 73% of Kazakhstan is zinc. In terms of import structure, major trading partners accounted for 88% of imports, and foreign trade activities picked up in April.

The spread of the overseas epidemic accelerated in April, and overseas control measures have not been relaxed. Peru and Mexico, as the world's top zinc mine producers, were suspended because the mining industry was not included in the necessary activities in a state of emergency. Zinc mine production mostly stagnated, while shipping restrictions caused part of the global trade flow to press the deceleration button, because with the exception of China, the overseas smelting end did not disclose more reductions. Under the background of the surplus of overseas mine end, the reduction of mine end production is relatively limited. On the other hand, China has a 30% dependence on imported mines, and due to the epidemic situation, this part of the supply will most likely be reduced in the next two months, that is, the risk of shortage of domestic mine supply will expand rapidly. The differentiation of internal and external fundamentals has rapidly revised up the internal and external price ratio to about 8.5, the import loss has narrowed to less than 200 yuan, and the foreign trade activity in the bonded area has gradually warmed up driven by profits.

In May, overseas countries plan to gradually restart their economies, and the relationship between supply and demand of overseas zinc is expected to be improved, but there is a long way to go, while the shortage of domestic mine supply has fallen to the ground for the actual production difficulties of the smelter, and the internal strength and external weakness are further strengthened. the import profit window opens directly, and the inflow of zinc ingots in the bonded area is accelerated. In the middle of the year, with the temperature picking up and the off-season of domestic zinc consumption gradually deepening, coupled with the previous price-locked imports of zinc flowing into the country one after another to form a supplement, the social inventory of zinc held steady at more than 200000 tons in May, while the supply-side story also entered the final stage. There is no more positive support for the fundamentals. While overseas LME inventory is low, while the Back structure is deepening, coupled with the consumption recovery brought about by the restart of the economy to dispel the haze of the epidemic, overseas performance is stronger than at home, and the price ratio is revised down rapidly. in terms of fundamentals, it is difficult to reopen the import window in the short term, that is, it is neither supported by demand nor driven by profits. at the same time, the domestic depot is slow, and the internal strong and external weak structure is weakened.

Taking into account the shipping cycle, actual imports are expected to be extended beyond June, so SMM expects refined zinc imports to rise slightly to about 40, 000 tonnes in May.

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