2010 October Zn Output Data Analysis

SHANGHAI, Nov. 29 (SMM)--

Zinc Concentrate:

According to data from China Nonferrous Metals Industry Association (CNIA), output of zinc concentrate was 309.5 kt in October 2010, down 1.8% MoM.  YTD output was 2.94 million mt from January to October, up 24.87% YoY.

Refined Zinc:

According to data released by the CNIA, domestic zinc output for October was 463 kt, up 1.7% MoM.  YTD output from January to October was 4.256 million mt, up 20.97% YoY.

According to an SMM survey, 400 kt of new capacity was put into production by domestic zinc smelters during 1H 2010.  Total output of refined zinc during this period was 2.477 million mt, up 30.4% YoY.

Zinc output had fallen on a monthly basis during June and July since smelters were conducting maintenance, adding the bad weather.  Output at smelters in Guangxi, Henan, and other provinces were severely impacted by power restrictions since September.

According to an SMM survey of zinc smelters, operating rates and output at domestic smelters have been rising since July.  The average operating rate at major domestic smelters was 78.6% in August, up 10% from July.  In September, the average operating rate rose to 82.1%, while October’s rate was 82.9%.

SMM believes the average operating rate has been increasing due to steady production at large smelters, although smaller smelters were impacted heavily by power restrictions.  Although domestic zinc output has been increasing since July, limited improvements in output at smaller smelters resulted in marginal gains in October, rising on 1.7% MoM.

According to the SMM survey, there will be 440 kt of new capacity to put into production by the end of 2010.  Zinc output in December 2010 and early 2011 will increase significantly if that capacity comes online, but new policies in the first year of the 12th Five-Year Plan may affect actual output.  SMM believes that domestic zinc production during 2011 even the entire zinc industry will depend more on government policies than market forces.

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