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High zinc concentrate TCs to continue into longer term in a well-supplied market
Nov 7,2018 18:28CST
smm insight
Zinc concentrate TCs are likely to stand at highs into longer term as ore output growth at miners overseas is set to continue

SHANGHAI, Nov 7 (SMM) – Treatment charges (TCs) for zinc concentrate across the Chinese markets are expected to stand at highs in the longer term as ore output continues to grow across miners overseas.

At the start of 2016, zinc concentrate TCs across the Chinese markets trended downwards after a slew of output suspension or cuts at miners overseas, including Glencore’s Australian Mount Isa and McArthur River as well as Australia's Century and the Lisheen mine in Ireland.

For domestic miners, environmental protection initiatives extended their application time to obtain a mining permit. This, together with declining grades of ore, sharply shrank the overall concentrate supplies and weighed on TCs. In the winter of 2017, stockpiling by smelters depressed TCs for domestic materials to a low of 3,400 yuan/mt in Zn content with TCs for seaborne materials at $13/dmt.

Zinc concentrate TCs stemmed their declines at the beginning of 2018 as supplies grew on output recovery and additions from miners overseas, including MMG’s Dugald River zinc mine, New Century Resources and Hellyer tailings projects. TCs began the uptrend since July with a peak at 5,000 yuan/mt in Zn content.

Zinc concentrate supply is expected to continue to grow in 2019 and accelerate in 2020 and this is set to buoy TCs.

SMM data showed that China’s output of refined zinc rose for three consecutive months as of the end of October and is expected to extend its gains in November.

This was because output recovery, rather than new capacity, bolstered the recent gains in refined zinc production. Demand from Chinese zinc smelters for concentrate remained relatively steady, and inflows of seaborne concentrate bolstered supplies and raised TCs.

Zinc concentrate

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