The China Nonferrous Metals Industry Association reported domestic zinc output in April was 446,500 mt, down 3.02% MoM. YTD output through April was 1.723 million mt, up 8.6% YoY.
Zinc prices extended declines into April, with spot zinc prices between RMB 14,500-14,600/mt. Falling zinc prices bite into margins of mines, but they did not contract discounts of TC due to ample zinc concentrate supply. SMM sources report domestic TC was between RMB 4,800-5,200/mt in early Q2, down RMB 50-100/mt from Q1, but some mines maintained TC stable to maintain good relationship with customers.
Despite zinc prices plunged, smelters rarely cut or suspend production because they had depleted inventories last year's end when zinc prices rose. Most of smelters maintaining zinc ingot inventories low in April were holding back goods.
45,000 mt in zinc reserves was delivered to the SRB in April, so output in the smelters sold reserves to the SRB grew, which is also a result of the 13% growth in output in Inner Mongolia.
Output in Hunan, Yunnan, Shaanxi, Inner Mongolia and Guangxi was the highest. Output in Gansu and Guangxi dropped most sharply in April by 11.8% and 9.2%, respectively.
In order to avert losses, some smelters began maintenance in the face of sluggish zinc price, and those completed deliveries to the SRB cut output. SMM anticipates domestic zinc output in May should fall more precipitously.