China's Zinc TCs Expected to Fall as Overseas Smelters Seek Concentrates

SHANGHAI, Sept. 29 -- China's zinc treatment charges (TCs) are expected to fall in the next few months as some trading houses supply concentrates to smelters abroad instead, said market sources.

    "Thanks to a rebound in zinc prices, we are getting more orders from western zinc smelters, who are operating at a higher rate these days," said an official at a trading house in Shanghai.

    The trading house has stopped selling concentrates in China, he said.

    "Given the rise in zinc prices, overseas miners are willing to pay a higher TC to process their concentrates... about several dollars more," said a Shanghai trader.

    China's TCs for imported zinc concentrates have stabilized at USD 185-195/mt, almost unchanged from two weeks ago.

    "Zinc TCs have hovered at around USD 185/mt for weeks, but this can by no means be understood as a result of supply easing up," said the trader.

    "Firstly, Shanghai zinc is much cheaper than the LME, which means local smelters are hesitant to import both refined zinc and zinc concentrates," he said.

    "Zinc is not on the toll trading list in China, so when a local smelter imports the concentrates it has pay based on LME prices but sell the finished product, or refined zinc, based on SHFE prices," he said.

    Shanghai zinc is about RMB 1,000-1,200/mt (USD 146-176/mt) cheaper than its LME counterparts, said a physical trader in Guangdong.

    (Source: Metal Bulletin)