Zinc price rockets but demand sluggish
2009-01-08 09:02:43 【Print】
BEIJING (Asian Metal) 8 Jan 09 – Zinc price keeps rocketing after the New Year holiday, up from RMB10,000/t (USD1,462/t) late December to about RMB11,500/t (USD1,681/t) this Wednesday in the Shanghai spot market. However, most participants are not very optimistic about the prospect of zinc market in the coming weeks, believing that zinc price may recoil soon.
A source from a Liaoning-based trading company reported that although zinc prices are shooting up, they have not benefited from the bullish movement, due to the murky demand from buyers. “Most buyers have been scared away by the sharp price increase, so we have few deals concluded,” said the source. “We are also very prudent to deal with the metal in the bullish market with bubbles. We would not hold the metal until we get an order from a buyer.”
The trader did not quote for the metal on Wednesday, as he has not received any inquiries. They offered SHG zinc ingot with HX brand at about RMB12,000/t (USD1,754/t) ex works on Tuesday, about RMB1,000/t (USD146/t) higher than the prevailing prices during the day.
The trader said that as there are few consumers in the market, it is hard to say that zinc market turns bullish, though price is rocketing. “In the real bullish market, buyers will be active in purchasing if prices increase. However, buyers are only watching the market, indicating that the market has not shaken off weakness completely so far.”
The trader predicts that zinc price may soften soon, due to the dark demand from consumers. If zinc price retreated to about RMB10,000/t, end users may become active rebuilding stocks before Spring Festival.
A source from a Yunnan-based zinc smelter reported that the trading in zinc market remains inactive, though price is still rising greatly. Most offers for zinc ingot increased further by about RMB500/t (USD73/t) to RMB11,500-11,600/t (USD1,681-1,696/t) in the Shanghai spot market on Wednesday. The producer only offers about RMB10,800/t (USD1,579/t) delivered to East China on Wednesday, about RMB600-700/t (USD88-102/t) lower than the prevailing prices.
The source said that few consumers placed orders at the increased price. Most of the smelter’s zinc ingot was sold to traders.
The producer also believed that zinc price may retreat gradually late this week on weak demand and profit taking.
The smelter is running with a monthly output of about 2,000t, based on its full capacity of 170,000tpy.
