[Zn] SMM Survey - Operating Rates at Domestic Zinc Smelters in October

SHANGHAI, Nov. 9 (SMM) -- A recent SMM survey of 39 zinc smelters (total capacity: 4.63 million mt/yr) revealed the following insights:

    1) Operating Rates

    According to the survey, output at the 39 zinc smelters during October was 310kt, with an average operating rate of 80.2%, up 1.9% from September levels.  Operating rates at smelters with capacity between 20-100kt/yr increased to 76.3%, up 5.8% compared with September levels, while operating rates at smelters with capacity of 100-150kt/yr (including 100kt and 150kt) were 79.8%, up 1.2%, and operating rates at smelters with capacity greater than 150kt/yr were 82%, up 1% compared to September.

    2) Raw Material Inventories

    According to the SMM survey, 20.5% of smelters believe raw material supply is tight, but the number of respondents is down from a September survey.  This is the time smelters sign long-term contracts for imported zinc concentrate, and according to SMM sources, a number of zinc smelters who previously only purchased zinc concentrate from domestic mines are now beginning to sign long-term contracts from overseas suppliers. In addition, the dependency of domestic smelters on imported zinc concentrate is becoming greater as the amount of zinc smelting capacity increases.

    3) Zinc Inventories

    Zinc inventories at smelters reported no significant changes during October, and SMM believes this situation is related to operating strategies at smelters and from smelters' views on the future market outlook.  However, it is worth noting that smelters normally keep zinc inventories low at the end of the year, and this condition will likely increase supply pressure in spot markets.

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