* China zinc output hit lowest in over 2 years in April
* Dragged down by lack of concentrate, green drive by govt
* Could push buyers to look overseas for metal, buoy global prices
By Melanie Burton
MELBOURNE, May 19 (Reuters) - China is likely to step up imports of refined zinc from this month, industry sources said on Friday, as dwindling global supplies of concentrate hit local output of the metal, used to galvanise steel.
China’s refined zinc output marked its lowest in more than two years in April as the impact from the closure of major mines in places such as Australia and Ireland stifled the concentrate supplies China relies on to churn out finished metal.
The nation’s ‘war on pollution’ has also curbed output as Beijing clamps down on mining and heavy industry in a drive to clear its skies.
That will likely push buyers of refined zinc to look overseas for supplies, boosting international prices that this week marked their weakest since November at a touch below $2,500 per tonne, after chalking up substantial gains last year.
“It is starting to bite,” said analyst Daniel Hynes of ANZ in Sydney. “The tightness is pretty much upon us.”
“We are looking for zinc to push back to $2,800 in the second half ... The zinc market is set to stay tight over the short to medium term. This certainly should provide a bit of a reality check for the bears.”
Imports of refined zinc from China’s bonded zones could be resold on the local market for a profit of as much as $45 this week, Reuters calculations show, near the strongest since January 2016, when the country shipped in around 60,000 tonnes of refined metal.
China brought in just 25,600 tonnes in March and total imports are down by two thirds this year.
Traders have already been turning to local exchange stocks. Shanghai Futures Exchange zinc stocks have halved since February to near 100,00 tonnes, the lowest since February 2015. ZN-STX-SGH
Meanwhile, China’s ‘war on pollution’ is entering its fourth year as it looks to dilute the environmental damage caused by years of breakneck economic growth, likely hitting production of base metals.
“The Chinese government is going to put a lot of pressure (on metals producers) to reform from an environmental perspective,” said the head of metals at a China commodity trade house.
“Definitely we are going to see companies with limited domestic availability of concentrate. We should see some opportunities for imports of refined metal,” he said, declining to be identified as he was not authorised to speak with media.
Reporting by Melanie Burton; Editing by Joseph Radford