Zinc & Lead
Heading on up
September 2017
After fluctuating during July, the LME zinc cash price increased 13% in August to close the month at US$3,141/t (US$1.42/lb). The zinc price is being driven by low market inventories and China’s manufacturing industry. China’s Purchasing Managers Index (PMI) for August rose 0.3 of a point to 51.7.

According to China Customs, imports of zinc concentrate into China totalled 165kt in July. a decline of 4% month on month. The decline in imports has been the result of higher domestic production and declining demand as a result of smelters performing annual maintenance. The drop in concentrate imports has filtered through to treatment changes. In August, spot treatment charges for imported concentrate into China were approximately US$53/t, an increase of 6% from the July average.

AME expects global refined zinc demand to rise 3.9% in 2017 to 14.4Mt, up from the 3.0% growth in 2016. We believe the growth will be driven China, where demand is forecast to increase 3.4% to 6.95Mt. China’s growth will be propelled by targeted housing measures and infrastructure policies from the Chinese Government.

AME has retained its forecast of a refined market deficit in 2017 of close to 460kt. While better than expected production was reported for the June Quarter from a number of smelters, including Industrias Peñoles’ 240ktpa Torreon, any gains were negated by ongoing maintenance from Chinese smelters (e.g. Tongling Nonferrous’ 100ktpa Anhui Tongguan and Xing’an Copper & Zinc 115ktpa Xing’an)

The lead cash price closed August at US$2,348/t (US$1.07/lb), 3% above the July close. LME lead stocks fell 3% to 149kt. Deliverable SHFE lead stocks closed the month at 33kt, 38% lower than a month prior.