Cars, infrastructure to fuel rise in Chinese zinc demand in 2014
* China will still have supply deficit of zinc in 2014
* Consumption may rise 5 pct, output to rise 6 pct - Antaike
By Polly Yam
BEIJING, Nov 1 (Reuters) - China's zinc consumption is expected to rise in 2014 because of urbanisation plans, infrastructure projects and strong car production, industry officials said, so it will remain a large importer of refined zinc despite higher domestic output.
That will provide support for London Metal Exchange zinc prices, which have fallen about 5 percent this year.
Industry officials at a conference hosted by state-owned research firm Antaike in Beijing said demand from the infrastructure and auto sectors would push up production of zinc galvanized steel, which accounted for 53 percent of China's total zinc consumption in 2012.
The front contract on the Shanghai Futures Exchange, which reflects spot prices in the domestic market, traded at 14,995 yuan a tonne on Friday, down 1.8 percent from the end of 2012.
A senior executive at a zinc end-user said the outlook for demand meant his firm would build up stocks of refined zinc if domestic prices fell to around the 14,500 yuan a tonne mark.
"Our orders have already increased in the past two months from the previous several months," the executive said.
Antaike has forecast that China's consumption of refined zinc would reach 5.93 million tonnes in 2014, up 5 percent from an estimated 5.65 million tonnes in 2013, which would itself be up 4.6 percent from 2012.
Production of refined zinc is expected to rise to 5.5 million tonnes in 2014 from 5.2 million in 2013, an increase of nearly 6 percent, as new smelters with combined capacity of 200,000 tonnes start up.
China has capacity of about 6 million tonnes currently.
Feng Juncong, chief zinc analyst at Antaike, told the conference that domestic zinc smelters would be willing to keep production steady in 2014 because of an increased supply of raw material concentrates, which would drive up processing fees.
The fees given by local miners to zinc smelters had ranged from 4,600 to 5,000 yuan a tonne this year and could hold at 4,800 to 5,000 yuan in 2014, she estimated.
Feng expects China's imports of refined zinc to reach about 600,000 tonnes in 2014, including demand for metal that investors and traders can use as collateral for short-term loans.
China imported 414,864 tonnes of refined zinc in the first three quarters of 2013, up 10.56 percent from a year before, and a large part of that was for loan purposes, traders at the conference said.
China produced 4.17 million tonnes of zinc in concentrate in the first nine months of 2013, official data shows, an increase of 14.2 percent from a year earlier, attributable to start-ups of new mines.
China's car production reached 17.14 million vehicles in January-September, up 15 percent from a year before, official data showed.
Official data showed that China produced 31.63 million tonnes of galvanised steel in the first three quarters of 2013, up 12 percent from the same period last year, and the bulk was zinc galvanized metal. (Reporting by Polly Yam; Editing by Alan Raybould)
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