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Japan’s Zinc Exports Seen Down by Mitsui Mining on Abenomics

Japan’s zinc exports may drop more than previously estimated because domestic demand is climbing as Prime Minister Shinzo Abe stimulates the economy, pushing premiums higher in Asia, said Mitsui Mining & Smelting Co. (5706)

Shipments may be 110,000 metric tons in the fiscal year through March 31, down 27 percent from the July forecast of 150,000 tons, said Osamu Saito, general manager at the business department of Tokyo-based Mitsui, Japan’s biggest producer. The nation shipped 126,000 tons the previous year, he said.

Lower exports from Asia’s fourth-biggest producer may help tighten supply and boost premiums in the region to the highest in at least five years, according to Saito. A global deficit may widen next year, with the average cash price on the London Metal Exchange forecast to rise to $2,050 a ton, Morgan Stanley estimates. Futures have fallen 9.2 percent this year, the second-best performer among the six base metals on the LME.

“The domestic market has been better than we had expected as demand increased, especially from the construction and equipment industries and for solar projects,” Saito said in an interview yesterday. “This will continue through March.”

Domestic demand may rise 7.2 percent to 505,000 tons this fiscal year from a year earlier, exceeding the previous forecast of 480,000 tons, Saito said. The growth will outpace a 1.9 percent gain in production to 584,000 tons, he said.

The metal for delivery in three months on the LME rose as much as 0.3 percent to $1,890.75 a ton before trading little changed at $1,887.75 at 3:14 p.m. in Tokyo.

Premiums

Annual premiums charged to buyers probably rose by $70 a ton to $80 a ton for 2014 from this year as supplies from Japan and South Korea fell, while biggest user China boosted imports, Saito said. Premiums may reach the highest in at least five years in 2014, he said, without giving estimates. The fee is added to the price of metal for immediate delivery on the LME.

Spot premiums in Shanghai rose 43 percent to $192.5 a ton this year, according to data from Metal Bulletin.

Japan’s total zinc exports fell 11 percent to 92,468 tons in the first nine months of this year from a year earlier, the finance ministry’s trade data show. Major overseas markets include China, Taiwan and Southeast Asian nations.

Korea’s exports of metal with minimum purity of 99.99 percent dropped 4.5 percent to 280,953 tons from January through October from a year ago, data from the Korea International Trade Association show. China’s imports of refined zinc rose 20 percent in the period. China and Korea are the world’s biggest producers.

Japan’s steel output may climb 3 percent to 110.56 million tons in 2013, the highest in five years, based on an estimate by the trade ministry. Rust-proof steel accounts for 52 percent of zinc usage, according to Macquarie Group Ltd.

Inventories in LME-monitored warehouses shrank about 20 percent to 971,350 tons this year through Nov. 26, exchange data show. Of the total, stockpiles in Asia held 31,400 tons, or 3.2 percent, according to the data.

To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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