China’s national average price of zinc ingot (at least 99.995%) assessed by Mysteel retreated by Yuan 1,094/tonne ($165.8/t) from the near 15-year high it reached on April 19 to Yuan 27,739/t including the 13% VAT as of April 28, mainly on changes in the global macro environment, market sources said.
The change in the external environment rather than zinc’s own market fundamentals has caused the metal’s prices to fall from the recent peak, according to a senior zinc researcher based in Shanghai. The constant uncertainties over the Russia-Ukraine conflict, market expectations of interest rate hikes in the US in May and June, and the fast depreciation of China’s Yuan against the US dollar all contributed, he said.
“It is not only zinc – prices of all commodities are being negatively affected more or less by these factors,” he pointed out.
Regarding Zn market fundamentals, the researcher said that the overseas market is still suffering from tight availability whereas in China, supply and demand are both weak and are rather balanced. However, he predicted that the balance may soon tilt to the demand side, because zinc demand and logistics will both revive once the ongoing COVID-19 pandemic in the country is contained, while domestic supply will remain under pressure.
“Any increase in domestic zinc supply will be limited due to the tight zinc concentrate output,” he said. Moreover, domestic zinc suppliers and trading houses have been exporting the metal to earn higher profits, further reducing domestic supply, he added.
Previously, China’s zinc exports were rather limited – averaging around a few hundred tonnes per month, while zinc imports can reach around 50,000 tonnes/month. But recently, imports are declining whereas exports are increasing significantly. “Zinc exports may even speed up when logistics resume after the pandemic,” he said.
Another market watcher based in East China’s Jiangxi province held the same view. “Major suppliers and trading companies are active in exporting,” she noted. Trafigura Investment China, the domestic subsidiary of the world’s leading independent commodity trading and logistics house Trafigura, was heard to have exported around 30,000 tonnes in one month alone, according to her.
This article has been published under an exchange agreement between MySteel Global and SteelMint.
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