HONG KONG (Reuters) - Plans to boost infrastructure spending in China and the United States are bolstering market sentiment towards zinc, used to churn out everything from pipes to auto parts, the head of Hong Kong-based metals supplier Lee Kee Group said on Monday.
That could support global prices for the base metal CMZN3 that have eased this year after surging in 2016 in the wake of the closure of several giant mines.
“We see that the economy in the U.S. and in China is slowly picking up (supported by infrastructure spending),” said Clara Chan, CEO of the biggest importer of zinc alloy into China.
“We are still hoping that the market will improve in the coming peak season, from April-May to August-September.”
U.S. President Donald Trump came to power promising massive infrastructure spending, while China is pushing ahead with its ambitious “One Belt, One Road” project to build a modern-day Silk Road through Asia to Europe.
Lee Kee Group, a subsidiary of Lee Kee Holdings (1637.HK), is a major supplier to China’s die-casting industry. It also has exposure to the construction sector through its assaying business where it tests the quality of materials.
Chan said that Lee Kee, which set up an office in Singapore last month, was looking to boost its business in Southeast Asia and Thailand as Chinese die-casters push to reduce costs by shifting production abroad.
“We have been servicing Southeast Asia for many years but because of this movement we want to have a stronger presence there.”
Meanwhile, Chan said that while there were some signals of a long-heralded shortfall in metals supply, the company was still able to source materials easily.
“When we look for spot materials we can certainly find spot material in the market.”
Reporting by Melanie Burton; Editing by Joseph Radford