Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Chinese Zinc Threatens Biggest Jump in 5 Years: Chart of the Day

Aug. 22 (Bloomberg) -- Surging Chinese zinc exports risk undermining price gains that have set the metal up for its biggest advance in five years, according to Natixis SA.

The CHART OF THE DAY shows China’s refined zinc shipments rose to the highest since April 2011 in July as prices reached an almost three-year high. The country’s imports of the metal fell last month and the premium Chinese buyers pay to obtain zinc dropped the most since September 2012. Zinc has rallied 15 percent this year, set for the largest gain since 2009, making it the third-best performer on the London Metal Exchange.

“Price dynamics have been increasingly supportive for Chinese metal producers over the past few months, encouraging many to increase output as profitability improves,” said Nic Brown, head of commodities research at Natixis in London. “Where domestic demand is not strong enough to absorb this increased output, it is increasingly being exported. There are growing near-term risks of a correction.”

China’s refined zinc exports almost tripled to 10,052 metric tons in July, a fourth straight monthly increase and following an almost 10-fold surge in June, customs data showed yesterday. This year’s exports are already four times the total in 2013, while July imports, at 41,681 tons, are 54 percent below a 4 1/2-year high set in January, the data show.

Declining premiums in Shanghai indicate Chinese supply is abundant and there’s still “substantial” spare capacity in the country’s smelting industry, Brown said. While export volumes remain much less than inbound shipments, the amount shipped out will be increasingly important for prices, he said.

Zinc, mostly used to rustproof steel, traded at $2,356.50 a ton on the LME yesterday. It reached $2,416 on July 28, the highest since August 2011.

To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editors responsible for this story: John Deane at jdeane3@bloomberg.net Nicholas Larkin, Tony Barrett

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.