Value Microcaps Motherboard

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China attains net zinc exporter status

Tuesday, January 30, 2007

China, the world's biggest producer and user of zinc, was a net exporter of the refined metal in 2006 for the first time in three years, reducing global supply concern that pushed prices to records.
China exported 7,000 tonnes more refined zinc than it imported last year, and the country may be a bigger net exporter in 2007, said Feng Juncong, chief zinc analyst at Beijing Antaike Information Development. The figure does not include trade in zinc products.

Chinese exports of zinc, used to galvanize steel, will add to global stockpiles that have risen 17 percent since shrinking to the lowest in more than 15 years on December 4, according to London Metal Exchange inventory data. The increased supply may depress zinc prices.

"The change resulted from reduced consumption of the metal in steel alloys," Feng said. Producers of low- grade alloys, a significant portion of zinc consumption, could not bear rising production costs after prices soared, she said.

Zinc touched a record US$4,580 (HK$35,724) on the London Metal Exchange on November 10. It was the second-best performing commodity in 2006 after nickel, as mine supplies failed to keep pace with rising demand.

China's exports of refined zinc rose to 325,000 tonnes last year from 146,000 tonnes in 2005, while imports dropped to 318,000 tonnes from 621,000 tonnes, Antaike said, citing customs data.

China's net exports of zinc this year will be higher than in 2006, said Feng.

"It is not likely that China will be a large net exporter of zinc," Zhou Guobao, director of the lead and zinc division at the China Nonferrous Metals Industry Association, said. "The government wants more imports and fewer exports of resources."

China raised export taxes on oil, steel and some non-ferrous metals last year in a bid to reduce a record trade surplus and meet domestic demand. It is also concerned about energy consumption and capacity increases for metals such as zinc.

The government has imposed a 5percent tax on exports of zinc with purity of less than 99.995 percent, effective January 1, according to the Ministry of Commerce. There is no export tax on zinc of 99.995 purity, which can be delivered on the London Metal Exchange.

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