Some Smelters Undergo Maintenance, Domestic TCs Increase Slightly in May [SMM Zinc Concentrates Weekly Review]

SMM May 9 News:

This week, zinc concentrate TCs saw a slight increase. The average weekly SMM Zn50 domestic TC price rose by 50 yuan/mt (metal content) WoW to 3,500 yuan/mt (metal content), while the average weekly SMM Zn50 imported TC price remained flat WoW at US$40/dmt.

In the spot ore market, during the first week after the holiday, zinc concentrate TCs in many domestic regions were largely finalised. In some areas, TCs continued to rise due to smelter maintenance or inventory reasons, but in most other regions, pricing remained basically flat compared to April, with only a limited increase in overall TCs for May compared to April. Regarding imported zinc ore, the SHFE/LME price ratio continued to widen this week, and traders of imported zinc ore actively offered quotes. However, smelters remained bullish on subsequent TCs, resulting in low purchase willingness. As a result, spot transactions of imported zinc ore remained sluggish during the week.

According to foreign media, after China imposed a new round of retaliatory tariffs on US goods, the lead-zinc concentrates from Teck's Red Dog mine in Alaska, which were destined for China, became a "casualty" of the Sino-US trade conflict. It is understood that Teck's senior management communicated with Chinese clients immediately, but the buyers expressed their unwillingness to pay the full tariffs for the Red Dog shipments that were about to be dispatched. Teck's commercial team recently flew to China to renegotiate sales contracts with major clients, discussing options including "replacing Red Dog output with zinc concentrates from other mines under its umbrella or from third parties." Teck's CEO, Jonathan Price, stated during an earnings call on April 24 that the tariff levels imposed by China on US imports indeed posed supply challenges, and the commercial team was evaluating various feasible options, including the possibility of adjusting supply sources to other markets. The good news is that Red Dog only ships its annual production during the four-month period after summer sea ice melts, so Teck still has time to finalise a solution. Currently, Teck has declined to comment on the negotiation details, only stating that shipments will not occur before July, given the strong demand for its concentrates and its broad customer base.

This week, the total inventory of SMM zinc concentrates at China's main ports was 390,000 mt, a decrease of 11,000 mt WoW, indicating a slight decline in port zinc ore inventory.

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