Higher TCs Push up China's Lead, Zinc Output in Aug

SHANGHAI, Sept. 14 -- China's production of both lead and zinc climbed up in August as smelters run at capacity on rising treatment charges (TCs).

    Lead output rebounded 6% from July to 365,000 mt in August, up 25.5% year-on-year, while zinc output rose a further 10% in July to 415,000 mt, 24% higher year-on-year, according to the National Bureau of Statistics.

    "The figures are unexpectedly high," said a trader in Zhejiang. "We expected higher output, but not that much higher."

    "This suggest there could be some pressure on domestic lead and zinc prices," he added.

    Smelters started to increase production after prices rebounded, and took the opportunity of rising TCs to reach for new capacity.

    Zinc TCs rose to about USD 200/mt this week, from USD 150-160/mt a few weeks ago while lead TCs are being quoted at USD 70/mt, from USD 40-50/mt in April, according to industry sources.

    Meanwhile, market participants were already looking forward to September production figures to see the impact of lead smelter closures after poisoning incidents in the country.

    "We hear of numerous lead capacity closures but we'll need to wait for the next month's output figures," said an analyst in Shanghai.

    Lead prices have fallen back in recent days as some market participants question whether the closures will really outweigh the impact of high inventory and new capacity.

    For the eight months so far, China has produced 2.5 million mt of lead, up 23% year-on-year, and 2.7 million mt of zinc, up 4% year-on-year, according to the statistics bureau.

    (Source: Metal Bulletin)