Zinc price still under sliding pressures
Spurred by overall rebound of the metals market and no adjustment to the tariffs on export of high-grade zinc,
zinc price in China rebounded in late December and early January, but analysts hold that the price movement may resume the declining trend again under multiple unfavorable factors.
According to monitoring by the Chinese Ministry of Commerce, the average spot price of No.1
zinc in China was about 19,115 yuan per ton in the later half of December, up 1.9 percent over that in the first half of the month. The rebound was also reflected in
zinc futures traded on the Shanghai Futures Exchange.
Zinc futures price on the Shanghai Futures Exchange plunged by more than 30 percent from mid-October to the first half of December.
Despite the recent rebound,
zinc price still faces sliding pressures, analysts say.
On the supply side, global
zinc supply tends to be excessive after quick capacity expansion. Domestically, the
zinc output is keeping fast growth, up 18.9 percent year on year to reach 3.395 million tons in the first 11 months of 2007. As new capacities under construction are yet to be released, fast growth of domestic
zinc production is still expected in 2008.
On the demand side, the growth of domestic demand for metals is beginning to slow down. Official data show that the growth rate in value added of the industry declined for the second consecutive month in November. Under macroeconomic control, the industrial growth may slow down further in 2008, which in turn will
lead to slowdown of metals demand.
Meanwhile,
zinc inventory on the Shanghai Futures Exchange was about 54,000 tons by Jan. 4, the highest level since launch of the
zinc futures contracts on the exchange.
– China Mining
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