demand for zinc increasing

China SRB's zinc purchases to increase imports in the short term

Hong Kong (Platts)--26 Feb 2009


China State Reserve Bureau's two zinc purchases in January and February, plus a possible third purchase in the second quarter, is expected to lift imports in the near term as local zinc supplies dwindle, industry sources in China said Thursday.

So far this year, SRB has bought 159,000 mt of zinc from Chinese smelters, which includes its second purchase of 100,000 mt on Wednesday. It bought 59,000 mt in January.

"We expect zinc imports to increase in the coming months due to decreased local supplies on SRB's purchases, as well as the wide gap between Chinese and and LME zinc prices," an analyst with Beijing-based Galaxy Securities said.

The London Metal Exchange three-month zinc price closed at $1,123/mt on Wednesday, up from $1,089/mt Tuesday, but much lower than Chinese domestic zinc prices in Shanghai at Yuan 10,500/mt ($1,536/mt) on the same day. On Thursday local Chinese prices rose Yuan 50 to Yuan 10,550/mt.

China imported 12,498 mt of refined zinc in January this year, up 306% from the same month last year, Chinese customs data showed.

The country imported 183,384 mt of zinc in full year 2008, up 23% from 2007.