Zinc Market Demand-Supply Balance in December

SHANGHAI, Jan 14 (SMM) - Supply: According to SMM survey, the domestic zinc concentrate output fell slightly in December. Some mines raised their operating rates. Hengfa Mining in Baarin Left Banner suspended the production for safety inspection in July 2021, and resumed the production in December. It will maintain the normal production in January and February 2022. Wenshan Dulong Tin Mine resumed the production from maintenance in December. Hebei Huaao lowered its operating rates in November and resumed the production in December, but not to full capacity. Rongda Mining in New Barag Right Banner, Qinghai Southern Mining and other mines suspended their production in winter, and some small and medium-sized mines conducted maintenance in December.

The zinc concentrate output is expected to drop significantly in January 2022, mainly because Hebei Hua’ao will suspend its production during January-March for the Beijing Winter Olympics. Xinjiang Qianxin Mining, Inner Mongolia Yindu Mining, and Inner Mongolia Yulong Mining will also suspend their production in winter. Some other mines will be shut down before the Chinese New Year (CNY) holiday and resume the production after February 15. Jilin Hanfeng Mining and Huili lead-zinc mine suspended the production for maintenance in December, and will contribute the major increment in the output in January after resumption.

Demand: SMM survey showed that the domestic output of refined zinc stood at 513,300 mt in December 2021, an unexpected plunge on the month. Expected output growth: The smelters in Inner Mongolia returned to full production after the maintenance and the energy consumption control came to an end. The smelters in Jiangxi and Shandong also resumed full production after maintenance. Unexpected output decline: Some smelters in Shaanxi and Guangxi reduced their output which was unanticipated. A few smelters in Gansu and Yunnan cut their output slightly. The maintenance of Yunnan Hualian Zinc & Indium and Hunan Sanli also contributed to the declines.

It is expected that the domestic refined zinc output will increase by 100 mt from the previous month to 513,400 mt in January 2022, basically the same as in December, according to SMM estimate. According to SMM survey, the expected growth in the output in January is mainly contributed by Yunnan Hualian Zinc & Indium who will complete its maintenance in January, as well as the increasing operating rates of smelters in Gansu. The output will also see some declines as some small-sized smelters in Hunan will be closed for Chinese New Year (CNY) holiday after mid-January. On the other hand, the secondary zinc smelters in Hunan and Sichuan will reduce their production during to the CNY holiday in February, and will resume the operation after mid-February. It is expected that refined zinc output will drop by 11,000 mt month-on-month in February.