China to become net zinc exporter: Morgan Stanley

The country's net exports of zinc may reach 500,000 metric tons in 2010, moderating to 430,000 tons in 2011 and 300,000 tons a year thereafter, analysts at the bank led by Peter Richardson wrote in an e-mailed report today, without giving an estimate for 2009.

“Chinese expansion is the most significant change to our forecast supply and demand estimates. Consequently, our view on zinc has deteriorated as reflected in our revised price forecasts,” the report said.

China, the largest producer and consumer of zinc, had net imports of 111,000 tons last year, according to Bloomberg data. Refined zinc imports jumped more than sixfold to 412,239 tons in the first five months this year, compared with exports of 4,188 tons, as the government increased purchases to boost stockpiles.

The metal used to galvanize steel has rallied 30 percent this year and last traded down 1.9 percent at $1,565 a ton (71 cents a pound) on the London Metal Exchange at 4:24 p.m. Singapore time.

Zinc smelter capacity in China will increase to 6.7 million tons a year by 2013, from 4.7 million tons last year, the analysts wrote.

The bank cut its 2011 zinc price forecast by 28 percent to 72 cents a pound. It increased its forecast for this year by 19 percent to 65 cents and its 2010 estimate by 5 percent to 68 cents “due to the rebasing effect from a stronger-than-expected price” in the second quarter of this year.

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