Rainy season to pressure south China zinc concentrate TCs

SHANGHAI, Jun 24 (SMM) – Zinc smelters in south China are expected to face greater downward pressure on concentrate treatment charges than those in the north, as the rainy season affects local mining operations.

As spot zinc prices fell below the key 20,000 yuan/mt level, profit margins across smelters have come off from the peak in May and miners also saw thinner profits. This is set to weigh on TCs.

Customs data showed that northern smelters relied more on imported ore than southern smelters. Imported zinc ore or concentrate took up over 50% of overall consumption across Chinese smelters in 2018.

China's imports of zinc ore and concentrate dropped in April as flooding in Australia, a major exporter to China, disrupted supplies. Imports are likely to rebound as Australian shipments recover.

In June-August, domestic miners in the north will swing into high gear as weather conditions improve, while a rainy season in the south will impact mining operations there.

This, together with a potentially larger increase in production across southern smelters, is expected to tighten zinc concentrate supplies in south China, and add pressure on TCs there.

Zinc output across southern smelters grew more significantly this year than output from the north, as idle capacity resumed across the southern province of Hunan and the relocated Zhuzhou smelter ramped up.