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Zinc imports to decline on output boost

By Li Xiaowei (China Daily)
Updated: 2010-03-26 10:28

SHANGHAI - Zinc imports by China may slump almost 60 percent this year as domestic production increases, said a CBI China Co analyst.

Imports may decline to 278,000 tons from 670,000 tons in 2009, Monica Gao said at a conference in Shenzhen on Thursday. Real demand may be 4.69 million tons, gaining from an estimated 4.25 million tons last year, she said.

China ramped up production of metals and boosted imports to records last year as the government's stimulus plan spurred construction and automobile sales. Zinc is used to galvanize steel. Smelters have restarted plants halted during the world's biggest post-war economic slump as prices gained 61 percent in the past year in Shanghai, boosting inventories.

"High metal stocks seem to have little impact on prices," said Huw Roberts, an analyst at CHR Metals Ltd, in Shenzhen on Thursday. "Should fund investors continue to buy metals and support prices at, or above, current levels, mines and smelters will enjoy a good year," he said.

Zinc stockpiles in China have increased to more than double the amount stored in warehouses monitored by the Shanghai Futures Exchange after output jumped, according to CBI China. Inventories in commercial warehouses in Shanghai and Guangdong increased to about 460,000 tons in the middle of this month from 380,000 tons at the end of 2009, CBI has said.

Production jump

Output of zinc increased 48 percent to 739,000 tons in the first two months and copper gained 16 percent at 702,000 tons, government figures show. Production may increase to 5.18 million tons this year from 4.36 million tons in 2009, CBI's Gao said.

"China's domestic mining won't be able to meet smelting needs as most new capacity added last year will be put into production this year," Gao said.

The country's zinc demand will climb by more than 10 percent this year as economic growth of 8 percent boosts demand from automakers and builders, He Renchun, president of Hunan Nonferrous Metals Corp, said this month. Hunan Nonferrous is China's largest producer of zinc.

Zinc for three-month delivery more than doubled last year on the London Metal Exchange, even as global demand weakened, after two years of declines. While usage rose 18 percent in China, it declined 25 percent in Europe and 11 percent in the US, the International Lead and Zinc Study Group, said on Feb 17.

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