August 22, 2008

Chinese zinc surplus in 2008 peed at 100,000 tonnes

Interfax China reported that analysts have released varying forecasts for zinc prices this year as China's impact is undetermined, although all agree that zinc will be in surplus globally for the first time in years.

According to the latest analysis from CHR Metals, despite predictions that zinc this year will be in surplus for the first time since 2003, a geographical gap between zinc concentrate supply and refined zinc smelting capacity is a factor expected to push up zinc prices on the London Metal Exchange.

Mr Claire Hassall a CHR Metals analyst said that a big surplus in global zinc concentrate supply is expected this year, despite disruptions from mining project delays and cancellations. But the situation is that the major zinc concentrate suppliers are outside China, while the major zinc smelting capacity is inside China. We expect the global zinc market, China excluded, will experience a slight shortage, while China's domestic market will be approximately 100,000 tonnes in surplus this year.

CHR Metals said China's zinc refining capacity grew 13% on an annual basis last year, dwarfing developments elsewhere in the world and is expected to grow twice as fast as the rest of the world this year. This means that mines outside China will need even greater access to Chinese smelting capacity.

China increased the export tax on unwrought zinc by 5% to 10% on June 1st 2007 and raised it again to 15% on January 1st in 2008. Currently, 0#zinc enjoys a 5% value added tax export rebate. There is also a 5% export tax on 1#zinc.