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[SMM analysis] under price pressure, ore smelting profits may be redistributed and zinc processing fees may be redistributed.
Jun 21,2019 18:31CST
translation
Source:SMM
SMM June 21-SMM believes that there is a possibility of regional differentiation in post-processing fees, which is based on the perspective of supply and demand.
The content below was translated by Tencent automatically for reference.

SMM, June 21 / PRNewswire-Asianet /-

SMM believes that there is a possibility of regional differentiation of post-processing fees, which is verified based on the point of view of supply and demand.

Based on the SMM survey data, the change of capacity utilization rate of smelter is characterized by the change of smelter output in January 2019 and May 2019. It can be found that the capacity utilization rate of southern smelter is improved rapidly, even if the emergency in the south of Hechi, Guangxi is excluded, the improvement of capacity utilization rate is still strong in the south and weak in the north.

Based on the customs data, only the active import part of the smelter is selected, and it is found that the import proportion of the smelter reached about 50% in 2018, and according to the import volume distribution, the northern smelter is highly dependent on imports, while the mine self-sufficiency rate of the southern smelter is relatively high. In this paper, taking the customs declaration port as the guiding index, it is found that the customs declaration volume of Jiangsu Nanjing Customs has reached more than 40%, and it is mainly radiated to Hunan, Henan, Anhui, Shaanxi, Liaoning and other places. If further evidence is given by the customs declaration quantity at the customs declaration port, it is relatively certain that the dependence of the north on imported minerals is higher than that of the south.

And enter June-August, winter and spring two quarters due to seasonal problems to reduce production of domestic mine centralized recovery, this part of the recovery mainly contributed in the north, at the same time consider May-June may have part of the import recovery inflow, and the northern refinery capacity expansion is relatively limited, from the point of view of supply and demand, the northern processing fee reduction pressure is not great for the time being. In the south, on the contrary, after entering the rainy season from June to August, the mining of raw ore in the south has been blocked to a certain extent, and the domestic mine supply has been tightened temporarily, but the rapid expansion of production capacity has led to a significant increase in demand, and there is a certain downward pressure on processing fees in the south.

However, from the point of view of pricing, with the spot price falling by 20000, the smelter has turned back some of its profits (mainly 2 to 8 cents), far away from the high level of profits during the year, but the price has fallen and mine profits have been directly damaged. if zinc prices fall further, small and medium-sized low-grade mines will be the first to face cost pressure. It is expected that in July, with the decline in prices, mines and smelters will redistribute profits, and the pressure to cut processing fees will increase slightly. On the differences between supply and demand in the north and the south, it is necessary to pay attention to the supply of imported minerals from May to June. If there is no recovery inflow of imported minerals from May to June, the downward pressure in the northern region with high import dependence is not much lower than that in the southern region, and even some areas may take the lead in reducing the downward pressure.

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