| China's monthly refined zinc
imports are expected to rise in the second-half of the year, from the
first half, due to an open arbitrage that benefits consortiums of buyers
and a lower import tax implemented from July 1, industry analysts said
Tuesday.
An improvement in the arbitrage trade ratio
between London Metal Exchange and Shanghai zinc prices since last week
made import trade lucrative, the analysts added. Imported zinc stocks are
kept at LME warehouses in Europe, then reshipped to China.
"With the opening of arbitrage trade
opportunities since last week, it's possible that China's monthly zinc
imports in the coming months may exceed June levels," a China
Securities Co. analyst said.
"[Imported zinc trade] has become
profitable since last week. [The open arbitrage], plus the lower import
tax, would encourage consortium buyers to import in the months to
come," he added.
Beginning July 1, China lowered the import
tax for refined zinc to 1%, from 3% previously.
In Beijing, a commodity analyst with a
subsidiary of Galaxy Securities said: "Back in H1, [the downstream
processing sector] mainly consumed their [zinc] inventories, so did not
import on a large scale, as seen in the lower year-on-year monthly zinc
import volume back in April-May.
"[Zinc import trade] mostly incurred
losses in H1," he added.
China imported 25,317 mt of refined zinc in
June, up 17% year on year, customs figures showed. Similarly, its H1
refined zinc imports rose 16% year on year, to 167,473 mt -- Kazakhstan,
Australia, Peru and South Korea accounted for 55% of the total import
volume.
A few industry experts, however, expect
China's 2011 national refined zinc imports to grow only moderately from
2010 on the back of a surplus in the domestic market.
Zinc inventories at Shanghai Futures
Exchange's warehouses hit 421,192 mt on August 19, up 20,742 mt from
August 12.
The Beijing analyst said: "We see zinc
imports in the coming months to be more than the June levels, due to
better arbitrage, as well as demand by consortium buyers, and
subcontracted raw materials processing deals. But the national zinc import
volume this year is expected to register just a single-digit percentage
growth due to the lackluster mainland Chinese demand."
Similarly, a zinc analyst with Nanhua
Futures Company said: "We see that by September-October, when the
boom zinc buying season [in China] comes, there may be a need to replenish
stocks, thus lifting imports by then.
"But overall, we don't see China's
2011 zinc import volume to be considerably greater than last year, due to
the not-so-strong demand back in H1," she added.
Source: Platts
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