SHANGHAI, Feb. 1 (SMM) -- On January 15th, cadmium pollution has been found in the Lalang section of the Longjiang River in Yizhou City, Guangxi Zhuang autonomous region, and later Hechi and Liuzhou cities took pollution control actions. Sources report that a number of local nonferrous metals companies were ordered to stop production, but SMM believes any impact from the pollution issue on domestic zinc supply should be limited.
First, SMM sources report that total capacity of closed zinc smelters is 120,000 mt, and these smelters are mainly located in Hechi and Liuzhou cities. Since some smelters in Guangxi have suspended or cut production previously due to power restrictions and financial problem, with large-scale capacity idled, the pollution issue should have little impact on zinc output in Guangxi. In addition, local large zinc smelters still maintain stable production.
Second, according to the China Nonferrous Metals Industry Association, zinc output in Guangxi only accounted for 8-9% of China’s total output in 2011. Moreover, most zinc ingots produced in Guangxi flow into South China, and zinc inventories in South China are sufficient currently. In this context, any impact on China’s zinc market supply from the pollution issue will be limited.
SMM expects zinc output in Guangxi to fall by about 10,000 mt during January 2012, and local zinc output will likely remain low in 2012 given environmental protection policies.