Zinc Oxide Operating Rate Rises in 2017

Total zinc ingots inventories across seven major markets in China stood at 284,100 mt as of April 15, up 6,100 mt from April 8, down 3,700 mt from April 11.

Shanghai base metals mostly trended lower on Tuesday morning after US dollar rallied significantly. Meanwhile, their counterparts on LME performed similarly.

Shanghai nonferrous metals mostly closed in the positive territory as the market was cheered up by the macro front, as China released its December official manufacturing and non-manufacturing PMI readings, which topped market expectation.

SHFE and LME zinc prices once again hit new highs in two months, mainly owing to the continuously rising electricity and natural gas prices which rose by more than 20% amid intensifying energy shortages in the eurozone, according to SMM. Meanwhile, the costs of smelters also climbed due to low zinc concentrate TCs as a result of tight supply.

China's refined tin output stood at 8,162 mt in November, up 3.38% from October. The average capacity utilisation rate was 82.03%, up 2.68 percentage points.

This is a roundup of China's metals weekly inventory as of December 3.

Market focus this week includes the readings of the manufacturing PMI in the Eurozone in November and the Markit manufacturing PMI in the United States in November; the one-year loan market interest rate as of November 22 in China. On the events front, the Federal Reserve FOMC will release the minutes of the monetary policy meeting this Thursday; Bank of England Governor Bailey will deliver a speech this Friday.

With the recent spike in raw materials prices, it is very difficult for indirect-process zinc oxide companies to survive if downstream sales prices do not increase. Since 2010 to date, the concentration of the zinc oxide industry has gradually increased, with the number of enterprises falling from more than 700 to around 150 as of today. However, although the concentration of production capacity has increased, the issue of overcapacity is very serious, mainly caused by the intensive competitions among the companies.

Shanghai base metals basically trended higher on Tuesday morning amid extended power rationing. Meanwhile, their counterparts on LME mostly fell.

The average operating rate across lead-acid battery producers in Jiangsu, Zhejiang, Jiangxi, Hubei and Hebei provinces decreased 0.22 percentage point from September 17 to 67.93% as of Friday September 24.