Mitsui Mining & Smelting Co. (5706), Japan’s biggest zinc producer, raised annual charges to overseas buyers by as much as 70 percent as consumption increases in China. Futures in London snapped a 10-day losing streak.
The higher fee compares with a 15 percent gain for special high-grade metal last year, said Osamu Saito, a general manager in the Tokyo-based company’s business department. He declined to disclose any dollar values.
Zinc stockpiles monitored by the London Metal Exchange shrank 31 percent since the start of 2013, with inventories in Asia contracting 68 percent. Morgan Stanley forecasts cash prices to average $2,127 a metric ton in 2014, a 10 percent increase on last year as the zinc deficit widens sixfold.
“The market’s been waiting for a turnaround in zinc,” said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty. “There are a lot of people, including myself, that think that 2014 could be the year.”
The metal for delivery in three months in London climbed 0.8 percent to $1,967 a ton at 2:16 p.m. Tokyo time, ending the longest run of losses since at least January 1989. Futures have fallen 9.6 percent in the past 12 months and declined in five of the past seven years. They slumped 6.6 percent from the close on Jan. 21 through yesterday.
“Tight supplies in Asia pushed the metal higher,” said Tetsu Emori, a senior fund manager at Astmax Asset Management Inc. in Tokyo. “It’s also a technical rebound.”
Exports from Japan and South Korea fell last year amid domestic demand and will drop again over the next 12 months while Chinese imports remain high, Saito said in an interview yesterday.
Belgium and the Netherlands joined Spain among the top 10 suppliers to China last year, indicating higher Asian premiums were enough to cover shipping costs from Europe, Saito said. LME stockpiles in Europe fell 40 percent since the start of 2013.
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