* China demand for zinc seen rising in late Sept-early Oct
* High domestic prices will push buyers towards imports
* Prices at home boosted by reduced production
By Polly Yam
HONG KONG, May 25 (Reuters) - China is likely to boost imports of zinc in the fourth quarter of the year after Beijing said it would speed up infrastructure investment, market players said, helping support prices for the base metal.
Zinc is set to reap the benefits of a push to fast-track investment into railways and other projects in the world's top consumer of the metal, with relatively high domestic prices likely pushing merchants towards imports when demand gathers momentum around the fourth quarter.
The price of zinc in international markets has mirrored a general decline in commodities due to Europe's debt crisis, with London Metal Exchange zinc dropping more than 10 percent from its high for the year so far, in January.
"The domestic zinc price should rise to 16,000 yuan in the fourth quarter," a sales manager at a large zinc smelter said. It stood at around 14,700 yuan ($2,300) on Friday.
He added that zinc smelters in the country, also the world's top producer of the metal, had cut output in recent months as they had not expected demand to pick up.
Zinc output in China will likley lag real consumption by around 400,000 tonnes this year due to these production cuts, state-backed research firm Antaike has predicted.
With domestic production falling by 7.3 percent in the first four months of the year, the supply contraction saw stocks ZN-STX-SGH monitored by the Shanghai Futures Exchange decline 17 percent to 348,785 tonnes last week, from a record 417,784 tonnes in August last year.
HINGES ON INVESTMENT
Galvanized steel, used in buildings, infrastructure and automobile sectors, is the top source of zinc-uasge in China. It was hurt after Beijing cut railway investment and suspended thousands of kilometres of rail projects after a fatal accident in July 2011, while the Chinese government maintains restrictions on the property sector.
Resuming the projects and allocating investment for new projects would take 3-4 months, analysts said.
Galvanized steel accounted to about a fifth of China's 5.2 million tonnes of zinc demand in 2011. Galvanized steel output fell 3.1 percent from March to 3.2 million tonnes in April.
"We are expecting more good news after June. Imports may rise later," a trader for a zinc alloy producer said.
($1 = 6.3447 Chinese yuan) (Reporting by Polly Yam; Editing by Joseph Radford)
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