[Zn] CBI Survey - Operating Rates at Zinc Smelters

SHANGHAI, July 15 (CBI China) -- A recent CBI survey of 37 zinc smelters (total capacity: 4.01 million mt/yr) revealed the following insights:

    1) Operating Rates

    According to the survey, output at the 37 zinc smelters during June was 271 kt, with an average operating rate of 81%, up 2.3% from May levels. Operating rates at smelters with capacity between 20-100kt/yr were 59.8%, down 4.3%. Operating rates at smelters with capacity of 100-150kt/yr (including 100kt and 150kt) were 81.2%, down 1.4%, while operating rates at smelters with capacity greater than 150kt/yr reached 92%, up 7% compared to May.

    According to CBI sources, current operating rates in the downstream galvanized sector were still relatively high despite the onset of the seasonal low demand period. The survey also revealed that domestic large zinc smelters reported increases in zinc alloy orders for June, contributing to the 7% growth for operating rates at smelters with capacity greater than 150kt/yr. Overall operating rates at smelters with capacity between 20-100kt/yr recorded significant declines in June, due mainly to unit maintenance, as well as suspension of production caused by environmental protection inspections and other problems at select smelters.

    2) Raw Material Inventories

    According to the CBI survey, 59% of smelters believe current zinc concentrate supply was not tight. Another 9% of smelters said their own zinc concentrate supply was relatively sufficient. However, 32% of smelters believe raw material supply remains tight, but was improving.

    3) Zinc Inventories

    The CBI survey revealed 46% of smelters were holding no zinc inventories, down slightly compared to May.  Another 32% of smelters were keeping zinc inventories normal, while the remaining 22% had only limited zinc inventories.

    4) Forecast

    According to the survey, 27% of smelters believe zinc market will report no significant improvement in 3Q due to weak demand, while 35% of smelters were optimistic towards overall zinc market. The remaining 38% of smelters held neutral views on zinc market.

    Up to now, domestic newly increased zinc smelting capacity has reached 860kt/yr.

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