SMM Zinc Survey - China Zinc Output Continues to Grow in December 2009

SHANGHAI, Jan. 11 (SMM) -- A recent SMM survey of 39 zinc smelters (total capacity: 4.73 million mt/yr) revealed the following insights:

1) Operating Rates

According to the survey, output at the 39 zinc smelters during December was 320 kt, up RMB 1,300 mt compared with November levels, and with an average operating rate of 81.2%, down 1.4%. Operating rates at smelters with capacity between 20-100kt/yr were 80.2%, up 4% compared with November levels, while operating rates at smelters with capacity of 100-150kt/yr (including 100kt and 150kt) were 75.4%, down 9.6%. Operating rates at smelters with capacity greater than 150kt/yr were 83.9%, down 0.1% compared to November.

2) Raw Material Inventories

According to the SMM survey, virtually all smelters say raw material supply is sufficient, which will help reverse recent rumors that zinc smelters were reporting tight raw material supply due to heavy snowfalls in north China.

The survey reveals 25.6% of smelters say they have little or no inventories, while the remaining 74.4% of smelters say their zinc inventories were relatively high. This number was down slightly compared with a CBI survey in November 2009. SMM believes smelters undertook an active approach toward end of the year sales, with some smelter insiders even reporting bonuses will be lower if inventories are high.

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