Raw Material Inventory at Smelters Eases, China Zinc Production Exceeds Expectations [SMM Analysis]

In November 2024, SMM China's refined zinc production increased by over 1,000 mt or more than 0.3% MoM, but decreased by nearly 12% YoY, exceeding the expected value. From January to November, domestic refined zinc production totaled over 5.6 million mt, with a cumulative YoY decrease of nearly 6%. Entering November, domestic smelter production slightly increased, mainly because the reduction at smelters in Henan, Gansu, Sichuan, and Inner Mongolia was lower-than-expected. Additionally, the major increase in production came from the higher-than-expected production in Qinghai, Inner Mongolia, Xinjiang, Hunan, and Shaanxi. Overall, production was significantly higher than expected. SMM expects that in December 2024, domestic refined zinc production will increase by over 20,000 mt MoM or about 5% MoM, with the cumulative domestic refined zinc production in 2024 decreasing by more than 6% YoY. Overall, December smelter production is expected to increase significantly, mainly because, except for minor reductions caused by maintenance in Hunan, Sichuan, and Xinjiang, other regions such as Inner Mongolia, Shanxi, Qinghai, Hunan, and Gansu will see varying degrees of production recovery and year-end production increases. Overall, December production is expected to exceed expectations. Additionally, based on the current production schedule of enterprises, smelter production in January 2025 is also expected to remain high.