October 08, 2008

Chinese zinc prices marching south wards

According to an inspection of Chinese ministry of commerce, domestic price of non ferrous metals continued to fall down in last week.

The price of zinc ore decreased by 20% in WoW, the price of 1# zinc declined by 16.9% in WoW, while the price of 1# lead fell down by 9.3% in WoW. As a result, the general average market price of production materials in China in last week came down by 0.1% than in previous week.

It is analyzed that the rapid increase of supply is the key factor driving the zinc price down. The cumulative zinc output in first nine months this year was 2.7 million tonnes up by 19%YoY. Meanwhile, China imported 294,000 tonnes of zinc ore concentrate in September 2007 up by 280.6% YoY and expect that Chinese zinc capacity could increase by 250,000 tonnes in 2008 and the high level of stock would limit the rise of zinc price as well.