SHANGHAI, Jun 4 (SMM) – China’s refined zinc output fell as expected in May, as fast declines in treatment charges (TCs) for domestic zinc concentrate depressed Chinese smelters production enthusiasm and led to output cut or maintenance at smelters in Hunan and Sichuan, showed the latest SMM survey.

Some smelters in Inner Mongolia, Yunnan, Guangxi and Gansu also carried out maintenance as scheduled, and smelters that recovered from maintenance in May were mostly located in Yunnan, Qinghai and Hunan. 

SMM data showed that 474,100 mt of refined zinc was produced in China in May, down 1.14%, or 5,500 mt, from a month ago and down 1.26% from a year earlier. Zinc capacity which was covered in the SMM survey remained unchanged at 6.09 million mt on an annualised basis.

Surveyed smelters produced 70,034 mt of zinc alloy in May, down 5.53% on the month, with hot-dipped material accounting for 45,147 mt.

SMM assessments showed that the mainstream TCs for domestic zinc concentrate declined to 5,000-5,200 yuan/mt in metal content in May with the TCs for imported zinc concentrate falling to $140-160/dmt. 

SMM expects China’s refined zinc output to further drop by 4,600 mt from May to 469,500 mt in June.

With the rally in zinc prices, Chinese miners are stepping up their mining operations and shipments. This drives up raw materials inventories at Chinese smelters and eases the supply tightness of zinc concentrate. Most zinc smelters currently have raw materials stocks that could meet production need for 20-25 days, and smelters in some regions postponed their maintenance schedule to July. Some smelters in Shaanxi and Anhui, meanwhile, have planned for overhauls in June.