Tight zinc concentrate supply to expand downside room in TC

SHANGHAI, Mar 24 (SMM) – Treatment charges (TCs) for zinc concentrate may face further downside potential on tight supply as Chinese miners are grappling with losses on falling zinc prices and the coronavirus pandemic has deterred operations of some overseas zinc miners. 

The recent plunges in zinc prices amid intensified panic over the COVID-19 erased profits at Chinese zinc miners. SMM learned that some miners struggled to maintain operations amid losses and some producers planned to delay their resumption. 

But large-scale output cut has not occurred at domestic mines given the existing average profit of 500 yuan/mt at zinc smelters, SMM survey showed. 

In the overseas market, Lundin Mining has suspended the expansion project at its Neves Corvo mine in Portugal, while the company originally targeted an output increase of 27,000 mt in metal content this year. Several mines under Brazil’s Nexa Resources have been put into maintenance due to authorities quarantine order amid the COVID-19 outbreak.

Disrupted mining is expected to weigh on supply and threaten zinc concentrate imports by China. 

According to SMM assessments, the weekly TCs for imported spot zinc concentrate stood at $260/dmt as of March 20, down $10/dmt from a week ago. The weekly TCs for domestic spot zinc concentrate declined 100 yuan/mt week on week to 6,100 yuan/mt, both in metal content, as of March 20.