Analysts at Scotiabank are wondering why Shanghai Future Exchange SHFE zinc inventories are down so much in the past week.
“This morning SHFE data revealed that China domestic inventories plummeted 26% (40,300 tonnes) week over week,’’ Scotiabank said in a morning note.
The note to investors went on to say that zinc treatment charges have been falling steadily due to declining concentrate availability.
“Some of these Chinese smelters have either halted production or put the smelters on care and maintenance early until treatment charges pick up or concentrate availability improves,’’ Scotiabank said.
It is being speculated that Chinese smelters are drawing down to deliver against obligations while smelters are shut.
Shares of companies with exposure to zinc include
Teck Resources Ltd. (
TSX: TECK.B,
NYSE: TECK,
Forum). On Friday, the shares rose 1% to $29.