SMM Lead Zinc Summit: Profits to further diverge

NANNING, May 25 (SMM) – Profits in China’s lead and zinc industries are likely to diverge further as processing fees decline and costs of ore materials rise, said Peng Tao, Secretary General of lead and zinc at the China Nonferrous Metals Industry Association.

In the first quarter of this year, profits in lead and zinc gained 6.4% and stood at 5.37 billion yuan, accounting for 15% of profits across the nonferrous complex. Mining profits rose 19.3% year on year and came in at 4.06 billion yuan. But smelting profits shrank 20.4% year on year and stood at 1.3 billion yuan, according to data that Peng shared at the SMM Lead Zinc Summit on Friday May 25 in Nanning, Guangxi province.

Peng also said that there was a renewed focus on environmental protection and production safety in the lead and zinc industries. Investment in mining and concentrating lost 24.6% in 2017 from a year ago and investments in smelting declined 22.8%.

Problems such as a lack of plants with integrated mining, concentrating and smelting processes, low industrial concentration, poor efficiency and weak risk capacity also plagued the Chinese lead and zinc markets, Peng added. This has further eroded the competitiveness of the industry.

Going forward, Peng sees growing risks in zinc prices given current high prices.

Average annual growth of consumption during 2016-2020 is expected to stand at 0.6% for lead and 1.7% for zinc, Peng predicted. About 4.8 million mt of lead was consumed in 2017, up 1.5% year on year. This growth is likely to dip in 2018 to stand at 1%.

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