Indications Of The Metal Buying Trend Of South Korea
If we are to look at the past 18 months, one can find some hint regarding the future of metal through the buying strategy made by South Korea. This also indicates the price outlook of several metals in the industry including zinc carbonate.
According to the Public Procurement Service’s administrator, Park Chun-sup, the country has been in the frontline when it comes to raising their foreign purchases of commodity in an attempt to fill their strategic reserve. They started stocking up since the last six months of 2016. The agency added that they are now planning to cut their stockpiles especially with base metals. Last year, the days of demand were at 62.2 and this year it will only be 53 day. For next year, the days of demand will be reduced further to 50.
Park Chun-sup said that inventories for next year are going to be reduced to more than 200,000 metric tons in the case of rare and industrial metals. In 2017, they were able to purchase 250,000 metric tons.
Park explained in an interview conducted in Seoul that they decided to buy a lot of stocks starting on the last six months of 2016 until last year because they are preparing for the prices which is expected to go up. Now the country has more than the amount they originally estimated. The main agenda of the agency is to distribute the supplies to local firms for 2018 instead of adding more to their stockpile.
He believes that the bull market will still include metals for 2018 but the gains will not be as noticeable as last year.
Looking at the six contracts by the LMEX Index, industrial metals have increase to over 25 per cent starting at the beginning of June and it has now reached its highest value recorded for the past five years. This is partly because of the international growth bouncing back and the limited supplies.
The agency is planning to reduce buying base metals such as zinc carbonate because it can be produced locally. Their aim now is to import more lithium carbonate which is not easy for the service to purchase because it belongs in the market of the sellers.