SMM 2017 Lead & Zinc Summit: Will Zinc Concentrate Remain in Deficit in 2017?

SHANGHAI, May 22 (SMM) - SMM interviewed some industry insiders at the SMM 2017 Lead & Zinc Summit about the following issues.

SMM: Will refined zinc output increase or fall in 2017? What are influencing factors? Will zinc concentrate supply remain in shortages? And what’s the outlook for zinc concentrate imports this year?

Yang Xiao, General Manager of Hechi Nanfang Non-Ferrous Metals Smelting Co. said zinc concentrate supply will not short of demand in 2017 and will gradually ease. China’s monthly zinc concentrate imports were 90,000-140,000 mt (zinc content) during November 2016-March 2017. Monthly zinc concentrate imports in 2016 bottomed at 40,000 tonnes (zinc content), compared to the highest of 170,000 tonnes (zinc content) in 2015. As to raw material inventories at zinc smelters, those were very low and only sufficient to 20 day or less than 10 days of production at some time last year. The level improved to 30 days or more at present.

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TCs of domestic zinc concentrate stabilized after the 2017 Chinese New Year holiday, which had been falling in the latter half of 2016. TCs rose 200-300 yuan per tonne in South China. TCs of imported zinc concentrate increase from 30 per dry metric tonne (DMT) to 70 per dry metric tonne (DMT).

Ren Xun, General Manager of Shaanxi Dongling Industry & Trade Group reckons refined zinc output will not post big growth in 2017, and will remain flat or fall slightly from 2016’s level, in light of raw material supply and cost at zinc smelters. Fewer than expected mines resumed production in the first quarter of the year, with supply still tight. So, TCs did not rise noticeably. When combined with cost factor, smelters were not enthusiastic to produce.

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Despite higher SMM/LME zinc price ratio and higher TCs of imported zinc concentrate, supplies did not grow remarkably. Downstream consumption was restricted by environmental protection inspections. Mines also suffered from this factor. In this scenario, supplies remained tight.

SMM: Will Term TCs Change?

One large lead and zinc trader from East China said Term TCs will remain largely unchanged this year because the benchmark price is at a record low, which is decided by fundamentals. Fundamentals will not change noticeably in 2017.

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