SHANGHAI, Apr. 12 (SMM) -- A recent SMM survey of 40 zinc smelters (total capacity: 4.875 million mt/yr; idled capacity: 120 kt/yr) revealed the following insights:
1) Operating Rates
According to the survey, output at the 40 zinc smelters during March was 338 kt, with an average operating rate rising to 85.2%, up from February's 81.7%. Only smelters with capacity between 20-100 kt/yr reported significant declines in output during March, while medium and large smelters reported increases in output. Operating rates at large smelters with capacity greater than 200 kt/yr and at medium-size smelters with capacity between 100-200 kt/yr (including 100 kt/yr and 200 kt/yr) rose during March by 6.9% and 4.2%, respectively, and with zinc output of 133 kt and 152 kt.
SMM believes increases in March zinc output were attributed to the greater number of days in the month compared to February, as well from a small number of smelters conducting unit maintenance in February which resumed production in March.
Shortages of hydro-electric power caused by the severe drought in southwest China has contributed most to changes in zinc output. For example, Sichuan Xichang Heli Zinc Company (60 kt/yr), Huidong Lead-Zinc Mine (50 kt/yr), Sichuan Sihuan Zinc Company (60 kt/yr), Guizhou Shuicheng Xianjin Zinc Company (100 kt/yr), and Yunnan Luoping Zinc & Electricity Company (120 kt/yr) all reported significant declines in zinc output during March. Their output is expected to remain low during April and May since drought conditions continue. However, any negative impact on output at large and medium smelters due to power shortages has been limited, with smelters including Yunnan Chihong Zinc and Germanium Company (160 kt/yr), Sichuan Hongda Group (220 kt/yr, including Yunnan Jinding Zinc Company), etc..
2) Raw Material Inventories
The survey also reveals the shortages of hydro-electric power supply in Yunnan, Sichuan, Hunan, and Guangxi provinces had a negative impact on the production at medium and small mines in these regions. According to the survey, 17.9% of smelters say raw material supply is tight, and this number of smelters is up significantly compared with a SMM survey in February. Meanwhile, 28.2% of smelters say raw material supplies are sufficient, but this number is down compared with 35.9% in February. In general, raw material stocks held by domestic zinc smelters are sufficient to meet production needs.
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