SHANGHAI, Sep 12 (SMM) – Production of zinc concentrate in China inched up 0.8% from a month ago but declined 7.3% from a year ago to 359,900 mt in Zn content in August, showed an SMM survey.

Operating rates across Chinese zinc mines came in at 78.7% last month, up 0.6 percentage point month on month but down 6.2 percentage points year on year.

The recovery from maintenance at some medium-sized and large mines contributed to the production increase, but the growth was capped by a cocktail of factors including new maintenance, mineral resource depletion and degradation, environmental restrictions, and expiration of mining permits or safe production licenses.

Narrower profit margins also deterred production from substantially expanding. Shanghai zinc prices hovered below the 19,000 yuan/mt level for much of last month, and this, together with firm treatment charges, squeezed margins across zinc miners.

While smelters remained in high gear, an oversupplied market, high raw material stocks at smelters and the competition from seaborne materials kept domestic miners from brining TCs down.

SMM assessments showed that TCs for imported zinc concentrate have climbed to $270-290/dmt. Only Yunnan saw zinc concentrate TCs edge down in August. In view of the thin profits, some mines slashed production or planned to do so.

Zinc prices returned above the 19,000 yuan/mt level in September, while most mines have recovered from routine maintenance.

With continued strong producing enthusiasm among smelters, production of zinc concentrate is likely to grow by a larger margin this month.

Output is expected to expand 3.6% month on month, but shrink 5.1% year on year to 372,900 mt in Zn content in September.

SMM expects the average operating rate across Chinese zinc mines to rise 2.8 percentage points from August to 81.6% in September. The reading would be down 4.4 percentage points from the same month a year earlier.