Zinc TCs May Hit USD 130/mt as Chinese Mines Reopen

BEIJING, June 3 -- State run nonferrous metals information provider Beijing Antaike Development forecast that Zinc treatment charges paid to Chinese smelters may rise above USD 130 per tonne over June to July from below USD 100 per tonne in May as more Chinese zinc mines restarted operations due to a rebound in global prices.

    TCs, the fees paid by mines to smelters to convert zinc concentrate into refined zinc are the smelters' major source of revenue. While Guangdong-based Jinrui Futures reported Chinese zinc smelters had concluded spot concentrate deals at TCs of USD 95 per tonne to USD 98 per tonne in the second half of May, Antaike and local traders said some plants in Hunan and Shaanzi provinces had fixed TCs at USD 110 per tonne to USD 120 per tonne.

    In April, TCs paid to Chinese smelters averaged USD 85 per tonne to USD 95 per tonne.

    Last year, TCs went as high as USD 280 per tonne to USD 300 per tonne.

    Antaike and traders said if more Chinese zinc mines were to resume operations, easing the domestic concentrate shortage, and LME zinc prices continued to strengthen as widely forecast, then TCs in China could rise beyond USD 130 per tonne in June to July this year.

    An Antaike official said "Higher recent zinc TCs are mainly due to more Chinese mines resuming operations, slowing down smelters' concentrate purchases from overseas, as well as a rebound in LME zinc prices."

    The agency estimated 70-75% of China's zinc mines were operating in May this year, compared with 65% in March. Over January to February, the rate fell below 50% due to weak global zinc prices.

    The LME official three-month zinc offer price stood at USD 1,525.5 per tonne Friday, up from USD 1,444 per tonne Thursday. In February, it was around USD 1,100 per tonne.

    Chinese domestic zinc prices stood at CNY 13,000 per tonne up CNY 300 per tonne from Friday. In February, they were CNY 10,000 per tonne to CNY 11,000 per tonne.

    Customs data showed China imported 1.04 million tonne zinc concentrate over the first four months of 2009, up 43% from the same period a year ago.

    (Source: Platts)