China Zinc Concentrate Output Down Sharply in July

SHANGHAI, Sept.2(SMM) - NBS reports China’s zinc concentrate output in July was 437,000 mt, down 4.29% YoY and 10.7% MoM. YTD output through July was 2.76 million mt, down 8.64% YoY.

SMM believes the sharp MoM drop in zinc concentrate output is due to continuously falling zinc prices, which cut into mines’ profit and reduced their willingness to produce. The average SMM #1 zinc price was RMB 15,270.4/mt in July, down RMB 724.8/mt from June.

Besides, the rainy season in South China affected ore freight and output. Zinc concentrate output in Guangxi fell 9,000 to 33,000 mt; output in Hunan decreased 8,000 to 36,000 mt; Sichuan saw zinc concentrate output falling 8,000 to 14,000 mt. Output in Yunnan was down 5,000 to 54,000 mt. Guangdong’s output declined 3,000 to 10,000 mt.

Zinc concentrate output in Gansu, Inner Mongolia and Shaanxi was down 7,000 mt, 3,000 mt, and 2,000 mt, respectively, to 34,000 mt, 161,000 mt and 25,000 mt. most mines in North China maintained output stable in July, with the exception of some mines in Inner Mongolia which were restricted by power supply shortages.

Zinc concentrate in Jiangxi and Xinjiang grew 5,000 mt and 2,000 mt, respectively, to 10,000 mt and 14,000 mt. Production at mines in Jiangxi was stable in July, with average monthly output of 4,000 mt in the first half of the year.

SMM expects domestic zinc concentrate output to fall in August. Some SMEs are unwilling to produce against low zinc prices, while the rainy season in some regions of South China has not come to an end yet, which will affect their output.

China’s zinc output was 506,700 mt in July, down 1.63% YoY and 9.44% MoM, according to the CNIA. Output in the first seven months of the year was 3.58 million mt, up 10.36% YoY.

SMM believes falling zinc prices and lower TCs of zinc concentrate depressed smelters. The average SMM #0 zinc price was RMB 15,326.52/mt in July. TCs of imported zinc concentrate dropped to USD 207.5/dmt, and those for domestic zinc concentrate were also down to RMB 5,400/mt (zinc content). SMM survey reports the average operating rate at domestic major zinc smelters was 78.81% in July, down nearly 4 percentage points MoM.

Aside from Henan and Yunnan, zinc output in all other regions slid in July. Output in Hunan, Guangxi, Gansu, Qinghai and Inner Mongolia fell noticeably. Output in Hunan declined over 15,000 mt, down 13.91% MoM, according to the CNIA. But SMM survey shows Hunan’s zinc output grew 3.78% in July. Zhuzhou Smelter undertook maintenance in June, and restarted normal production in July, adding to zinc output in Hunan. Zinc output in Guangxi fell from maintenance at SMEs, down 12,000 mt, according to the CNIA. Output in Gansu, Inner Mongolia and Qinghai decreased 27.04%, 16.04% and 58.47%, respectively on the month. A growing number of smelters, including Bayannur Zijin Nonferrous Metals, Inner Mongolia Xing’an Copper & Zinc Smelting Company, Gansu Chengzhou Mining & Metallurgical Group, Gansu Baohui and Western Mining, cut output in July for maintenance, reducing zinc output in the three regions.

The CNIA reports zinc output fell in July on both MoM and YoY basis. However, SMM survey reveals the average operating rate at domestic zinc smelters rose 4.18% YoY in July, despite a drop on the month. Operating rates at medium and large smelters rose 3.35% and 12.52% YoY, respectively.

SMM sees a further decline in domestic zinc output in August. Output at Bayannur Zijin Nonferrous Metals, Zhuzhou Smelter, Hunan Taifeng Mining Group, Gansu Chengzhou Mining & Metallurgical Group, Gansu Baohui and Jiangxi Copper grew in August, but the growth is not significant. Besides, Huludao Zinc Industry, Guangxi Hechi Nanfang Nonferrous Metals Company, Yuguang Zinc Industry Company and Baiyin Nonferrous Metals Company’s Northwest Zinc Smelter Factory cut output.