No Significant Production Cuts at Smelters in May, Zinc Concentrate TCs Continue to Decline [SMM Zinc Concentrates Weekly Review]

SMM News, May 8:

Looking at weekly data, the SMM Zn50 domestic weekly average TC fell 150 yuan/mt Zn WoW to 700 yuan/mt Zn, and the SMM Imported Copper Concentrate Index (weekly) for zinc dropped $6.5/dmt WoW to -$45.75/dmt.

Domestic ore market. This week, domestic smelters continued negotiations on May zinc concentrate TCs, with pricing in some regions yet to be finalized. According to market sources, the SHFE/LME price ratio for zinc has remained at low levels recently, and domestic smelters continued to actively purchase domestic zinc concentrates. With essentially no significant production cuts in domestic refined zinc output in May overall, market demand for zinc concentrates remained robust. The domestic ore supply-demand pattern remained tight, and zinc concentrate TCs continued to decline in multiple regions.

Imported ore market. This week, imported ore traders gathered at the LME Hong Kong conference, with few offers for imported ore in the market. Domestic smelters prioritized purchasing domestic zinc concentrates, and there were virtually no transactions for imported ore during the week. According to market sources, Antamina recently offered zinc concentrates at -$60/dmt, with other high-grade ore offers also at low levels. Overall imported TCs remained depressed.

On May 5, according to foreign media reports, an explosion occurred at Glencore's Kazzinc metallurgical plant in Ust-Kamenogorsk, Kazakhstan, killing 2 and injuring 5. Kazzinc stated that preliminary information indicated the accident occurred during the cleaning of flue gas extraction equipment, with a subsequent fire and partial structural collapse at the site. Kazakhstan's Ministry of Emergency Situations confirmed the fire had been extinguished. Glencore's Kazzinc is Kazakhstan's largest zinc producer, also producing lead, copper, gold, and silver. Kazzinc's annual metal output is approximately 250,000-300,000 mt of zinc, 100,000-150,000 mt of lead, and 87,500 mt of copper cathode. The company has not yet disclosed the specific impact of the accident on zinc, lead, copper, and other metal production. Based on currently available information, the accident primarily involved flue gas extraction/dust removal equipment and may cause temporary disruptions to related smelting processes, but there is no evidence that the main zinc electrolysis production lines were damaged. Further attention is needed on whether the company will disclose the specific scope of affected production cuts and the repair timeline.

This week, SMM zinc concentrate inventories at China's main ports totaled 254,000 mt in physical content, down 30,000 mt in physical content WoW, with Lianyungang port inventories contributing the majority of the decline.