Zinc Production Grows in 1H 2010, Zinc Market to Face Challenges in 2H 2010-Shanghai Metals Market

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Zinc Production Grows in 1H 2010, Zinc Market to Face Challenges in 2H 2010

SMM Insight 11:07:50AM Jul 26, 2010 Source:SMM

SHANGHAI, July 26 (SMM) --

China's Output of Zinc and Zinc Concentrate in 1H 2010 Grow Significantly YoY

According to data from China's National Bureau of Statistics, China's zinc output was 425 kt during June, down 5.8% MoM, and with YTD output of 2.477 million mt, up 30.4% YoY.  China's output of zinc concentrate was 400 kt during June, up 17.6% MoM, and with YTD output of 1.795 million mt, up 40.8% YoY.

Zinc output experienced significant YoY growth for two reasons.  First, average zinc prices in 1H were much higher than the same period of 2009, with average SMM prices for #0 zinc from January to June at RMB 17,448/mt, up 47% compared with the 2009 average price of RMB 11,872/mt, and this higher 2010 price helped boost zinc production.  Second, overseas demand fell sharply during 2009 as a result of the global financial crisis beginning in late 2008.  China's zinc exports fell significantly as a result, and zinc output was down as well. 

Output of zinc concentrate also grew significantly on a yearly basis.  Lead-zinc ore operators ran at higher operating rates during 1H 2010 due to higher prices for zinc concentrate.  The average TC of zinc concentrate rose from RMB 4,603/mt in 1H 2009, to RMB 5,748/mt in 1H 2010, helping output of zinc concentrate post YoY growth in excess of 40%.

Zinc Market Will Face Challenges in 2H 2010

Zinc prices have fallen from RMB 18,000/mt in early May, to RMB 13,500/mt in early June, and the size and speed of the price decline is depressing market sentiment.  According to SMM sources, zinc smelters have generally been conducting maintenance or have been cutting production since June.  Now is also the beginning of the seasonal low demand period for zinc as well, so domestic zinc markets are expected to be relatively quiet in 3Q.  In addition, economic and environmental policies in China and overseas are also affecting zinc demand, including recent property market control measures in China and the ongoing  national budget crisis in European countries.  In this context, there is high possibility that slower global economic recovery will exert a negative impact on zinc price trends in 2H 2010.

 

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn

Zinc Production Grows in 1H 2010, Zinc Market to Face Challenges in 2H 2010

SMM Insight 11:07:50AM Jul 26, 2010 Source:SMM

SHANGHAI, July 26 (SMM) --

China's Output of Zinc and Zinc Concentrate in 1H 2010 Grow Significantly YoY

According to data from China's National Bureau of Statistics, China's zinc output was 425 kt during June, down 5.8% MoM, and with YTD output of 2.477 million mt, up 30.4% YoY.  China's output of zinc concentrate was 400 kt during June, up 17.6% MoM, and with YTD output of 1.795 million mt, up 40.8% YoY.

Zinc output experienced significant YoY growth for two reasons.  First, average zinc prices in 1H were much higher than the same period of 2009, with average SMM prices for #0 zinc from January to June at RMB 17,448/mt, up 47% compared with the 2009 average price of RMB 11,872/mt, and this higher 2010 price helped boost zinc production.  Second, overseas demand fell sharply during 2009 as a result of the global financial crisis beginning in late 2008.  China's zinc exports fell significantly as a result, and zinc output was down as well. 

Output of zinc concentrate also grew significantly on a yearly basis.  Lead-zinc ore operators ran at higher operating rates during 1H 2010 due to higher prices for zinc concentrate.  The average TC of zinc concentrate rose from RMB 4,603/mt in 1H 2009, to RMB 5,748/mt in 1H 2010, helping output of zinc concentrate post YoY growth in excess of 40%.

Zinc Market Will Face Challenges in 2H 2010

Zinc prices have fallen from RMB 18,000/mt in early May, to RMB 13,500/mt in early June, and the size and speed of the price decline is depressing market sentiment.  According to SMM sources, zinc smelters have generally been conducting maintenance or have been cutting production since June.  Now is also the beginning of the seasonal low demand period for zinc as well, so domestic zinc markets are expected to be relatively quiet in 3Q.  In addition, economic and environmental policies in China and overseas are also affecting zinc demand, including recent property market control measures in China and the ongoing  national budget crisis in European countries.  In this context, there is high possibility that slower global economic recovery will exert a negative impact on zinc price trends in 2H 2010.

 

Copyright © SMM. All Rights Reserved

None of this material may be used for any commercial or public use in any forms or means, without the prior written consent of SMM. For reproduction issue, please contact us by email: service.en@smm.cn