Refined Zinc Output Declined More than Expected amid the Tight Raw Material Supply and the Rapid Decline in Profits

SHANGHAI, July 6 (SMM) - China's refined zinc output stood at 490,300 mt in June, down 24,900 mt or 4.84% MoM and 17,700 mt or 3.48% YoY. From January to June 2022, the combined refined zinc output was 2.973 million mt, a decrease of 1.49% year on year. SMM survey showed that the output of domestic refined zinc decreased in June and was less than expected.

The output increment was mainly brought about by a smelter in Inner Mongolia which resumed the production after maintenance. In addition, a large smelter in Hunan resumed normal production in June after a minor overhaul. Some smelters in Shaanxi and Sichuan increased the production. Therefore, the output increased.

The decline in output was mainly caused by a smelter in Henan which was under maintenance. In addition, some smelters in Shaanxi and Yunnan took maintenance. Some smelters in Gansu and Qinghai were overhauled, resulting in major reductions. Some small-sized smelters in Hunan reduced the production and the output of some smelters in Inner Mongolia declined, bringing unexpected reductions. On the whole, due to the shortage of raw materials and the rapid decline of profits, the output in June declined more than expected. Therefore, the output declined more significantly.

SMM expects that China's refined zinc output will increase by 6,300 mt to 496,600 mt in July, down 18,600 mt or 3.62% YoY. From January to July 2022, the combined refined zinc output is estimated to be 3.47 million mt, a decrease of 1.8% year on year.

A smelter in Henan resumes the production after maintenance, which brings to the increase in output. In addition, some smelters in Shaanxi and Gansu resume the production. At the same time, a smelter in Qinghai resumes from maintenance, which contributes most of the increases. A smelter in Inner Mongolia plans to increase the production in July. Moreover, a smelter in Sichuan will resume the production in July, but the output will increase only slightly and it will not be sustainable.

The decline in output was mainly caused by some smelters in Inner Mongolia which plan to take maintenance in July. In addition, one of the smelters also plans to overhaul in August. A smelter in Gansu continues to overhaul, hence the output will decline. Some smelters in Hunan suspend the production due to problems such as high costs.