Chinese Zinc Imports To Fall As Output Increases

Chinese zinc imports look set to fall by 60% this year as the country increases production of the metal.

Monica Gao of CBI China Co told a conference in Shenzhen on Thursday that she expects imports to fall to 278,000 tonnes from a level of 670,000 tons in 2009. This is despite demand rising from 4.25 to 4.69 million tons.

The government’s stimulus plan has led to a sharp increase in zinc production and smelters have restarted plants halted during the financial crisis as prices rose by 61% during the course of the year. Output increased 48% to 739,000 tons in the first two months of 2010, while copper production rose 16% to 702,000 tons, Ms 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," she added.

Zinc stockpiles have increased to more than double the amount stored in warehouses monitored by the Shanghai Futures Exchange after output jumped, according to Ms Gao. 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.

"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.

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, told the People’s Daily. Hunan Nonferrous is China's largest producer of zinc.