Yesterday China opened its new zinc stockpile plan by buying 59,000Mt of the stuff from seven of its local producers. A real disappointment.
Why so? Because the original plan was to move immediately to 100,000MT and then eventually to 300,000MT of stockpile, but smelters and miners weren’t attrcted by the low bid made by their government. As DJNW reports here, “The volume suggests the bureau may be unwilling to spend more to prop up smelters.”
The result can be seen in today’s metals prices. Zn had been threatening to break away from the sub 60c/lb funk it’s been in for the last months but it’s doing nothing but falling back to resistance again.
And stocks like the heavily Zn dependant Breakwater (BWR.to) that popped on expectations last week have fallen back again.
The bottom line is that the demand slump looks set to continue. With the People’s Government of China taking just 59,000Mt away from a world that consumed around 11 Million MT last year, they’re going to have to get more Keynesian than that to move things in any great style.
