Latest Metal Bulletin-assessed Shanghai bonded zinc stocks were at around 85,000-90,000 tonnes at the end of November, down by 45.3% year on year.
Inventories rebounded from 55,000-60,000 tonnes at end October, their lowest point in Metal Bulletin’s historical data, which started in April 2015.
A slowdown in Chinese domestic demand amid environmental crackdowns around the country is believed to be the main reason behind the rise in stocks, as its main downstream buyers –galvanized plate producers – have high pollution risks.
"The operation rate of galvanized plate has fallen from around 70% to 60%, so that demand for zinc ingot also fell recently," a smelter source said.
Slow demand led to bigger discounts in local domestic zinc ingot trading, which has weakened the arbitrage ratio between London and Shanghai. Spot zinc premiums in the local market logged a loss of around 200 yuan ($30) in...