SHANGHAI, Oct. 24 (CBI China) -- A recent CBI survey of 33 major domestic zinc smelters (total capacity: 3.78 million mt/yr) revealed the following insights:
According to the survey, zinc output of these zinc smelters was 253.8 kt during September, with operating rates at 80.57%, a slight increase from August levels. Smelters with capacity more than 150kt/yr maintained previous operating rates, while those with capacity ranging from 20kt/yr to 150kt/yr increased the rates during September. Of those, the growth at smelters with capacity 100-150kt/yr was relatively small, only up 5.95% from previous level, while those with capacity of 20-100kt/yr rose rapidly by 11.9%, which was mainly caused by production resumption at smelters after unit maintenance during August, such as Chifeng Kubo Hong Ye Zinc Industry Company, Nyrstar Yunnan Zinc Alloys Company and Sichuan Huidong Lead-Zinc Mine Company, with respective capacity of 110kt/yr, 60kt/yr and 50kt/yr.
2) Inventories of Raw Materials
Only 5 of those smelters said they held sufficient inventories of raw materials, and basically they had their own mines. The other 11 reported tightening supply of zinc concentrate, and a couple of them had to suspend production as a result, such as Sichuan Sihuan Zinc Company. The remaining 17 added inventories of raw materials in their stock were sufficient for production, but it was very difficult to purchase domestic concentrates.
The survey shows that approximately 85% of smelters were pessimistic about the outlook and acknowledged existing zinc prices had not bottomed out, still possible to go down further, with a generally conservative perspective of the bottom price at RMB 10,000/mt. Besides, none of them held an optimistic attitude about the outlook, and the remaining 15% of smelters had no clear views for the outlook based on the survey.
4) New /Expanded Projects
Although some of those smelters have new projects come online during 2008, the smelters tightly controlled output amid the sluggish market sentiment. Smelters cut operating rates at those new projects and even shut down new units. While those projects scheduled to be put into production during 4Q 2008 were postponed to a different extend.
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