Active Production among Zinc Smelters May Lead To Pressure on Supply

SHANGHAI, Mar 13 (SMM) - Domestic refined zinc output in March is estimated to exceed 560,000 mt as high profits have propelled smelters to ramp up production, which may lead to a supply surplus. The output loss caused by power rationing in Yunnan will be 8,000-9,000 mt though. In April, smelters of Huludao Zinc Industry and Gansu Baohui will be under maintenance, and the affected output will be limited to 5,000 mt per month. In terms of demand, enterprises in north China have resumed normal production with the end of environmental protection-induced production restrictions. The actual orders for infrastructure construction have improved, albeit still mediocre, while the orders in the photovoltaic industry are growing. Overall, operating rates of galvanising enterprises will maintain high in the near term.

Operating rates of die-casting and zinc oxide enterprises will slow down in growth due to poor orders. In addition, the absolute in-plant inventory of downstream enterprises still remained low, and the social inventory of zinc ingots continued to fall last week. Therefore, given the less severe conflict between supply and demand, zinc prices are expected to range between 225,000-228,000 yuan/mt in terms of the lowest level, while peaking at 233,000-235,000 yuan/mt.