Great Investment Articles

China Commodities Weekly
October 29, 2007

• China was a net importer of zinc in September for the first time since May. In September, China’s exports of refined zinc fell to 12,325 tonnes, down 44% MOM and 18.5% YOY. Imports more than doubled compared with August, to 13,029 tonnes. Domestic refined metal production remained modest. In September, China produced 324,800 tonnes of zinc, up 13.9% YOY.

• On the input side, China imported 294,408 tonnes of zinc concentrate in the month, up 280.6% YOY, a record high. Domestic mine production only grew 13.1% YOY to 222,600 tonnes in September.

• We view the September zinc data as very positive. In the first nine months, China grew its concentrate imports by 178% YOY to 1.557 million tonnes. With this, China is only a very small net exporter of the refined metal (143,504 tonnes) and a small net exporter of galvanized steel (195,718 tonnes). This shows that on a net basis, China has been sucking up the world’s growing supply of zinc mine output, turning it to refined metals, and then using it for domestic consumption. In the first nine months, China’s galvanized steel output grew 51.9% to 15.08 million tonnes.