Refined zinc imports
Starting with this month, China has the plans to increase refined zinc imports. As vanishing global supplies have a big impact on the local zinc outputs; they aim to cover the deficit by boosting the refined zinc imports.
Observing the China’s refined zinc production, in April it came to the lowest levels in more than 2 years. It happened due to the end up of some major mines in Australia. As well as in Ireland; This closure of important mines suffocated the China’s concentrate supplies. Which were of huge value for China’s industry.
Mining and heavy industry
Most noteworthy, the China’s ‘war on pollution’ also impacted the outputs in a way it restrained them firmly. Beijing is giving a huge efforts in mining and heavy industry; aiming to clear its environment, and pay attention to the ecological aspect of its production.
This will inspire customers for refined zinc to search their supplies overseas. It will likely lead to Boosting international prices, which this week leveled the lowest points since November.
“It is starting to bite.”
“The tightness is pretty much upon us.” said an analyst from ANZ Research.
“We are looking for zinc to push back to $2,800 in the second half … The zinc market is set to stay tight over the short to medium term. This certainly should provide a bit of a reality check for the bears.”
According to market data, and some analysts opinions, the zinc market price is to go up in forthcoming period (short to medium term), providing some kind of a reality check in markets.
Imports of refined zinc, from China’s guaranteed zones, could afterwards be resold on the local market for a profit. This week’s price leveled to $45; near the strongest since January 2016. In January 2016 the country shipped in around 60,000 tonnes of refined metal.
– China brought in just 25,600 tonnes in March and total imports are down by two thirds this year. (Reuters)
Most market participants have yet been turning to local exchange stocks. SHFE zinc stock fell for 50% since February. To the amount about 100,00 tonnes; which makes them the lowest since February 2015.
‘War’ on pollution
In the meantime, ‘war on pollution’ is slowly driving into its fourth year. The idea of the concept is to attenuate the environmental damage caused by periods of glowing & fast economic growth in China. Which will likely affect the production of base metals.
– “The Chinese government is going to put a lot of pressure (on metals producers) to reform from an environmental perspective,” said the head of metals at a China commodity trade house. (Reuters)
“Definitely we are going to see companies with limited domestic availability of concentrate. We should see some opportunities for imports of refined metal,” he said, declining to be identified as he was not authorized to speak with media.
In conclusion, it is important for Beijing to focus on its ”environmental health” and the clear blue skies, but these concepts are firmly going to impact the base metals production. And as well, the base metal prices, and global supply. The forthcoming period, short to medium term will definitely bring the higher global prices for zinc, as China also plans to boost the refined zinc imports.
The long term results will come themselves, it is the time who will show.