Smelters Actively Rushed to Purchase Domestic Ore, Zinc Concentrate TCs Continued to Decline Across Multiple Regions in China [SMM Zinc Concentrates Weekly Review]

SMM April 17 update:

Looking at weekly data, the SMM Zn50 domestic weekly average TC decreased 100 yuan/mt Zn WoW to 1,250 yuan/mt Zn, and the SMM Imported Zinc Concentrate Index fell $9.25/dmt WoW to -$28.5/dmt.

Domestic ore market. The SHFE/LME price ratio for zinc continued to deteriorate this week, with the import loss on zinc concentrates widening to over 2,000 yuan/mt Zn. Driven by economic considerations, smelters actively rushed to purchase domestic zinc concentrates, and domestic TCs in multiple regions continued to decline this week. It was learned that although zinc concentrates supply in the Chinese market remained tight in April, domestic sulphuric acid prices stayed elevated, with by-product revenues continuing to supplement domestic smelters' profits, and no significant production cuts have been observed at domestic smelters so far.

Imported ore market. Offers for imported zinc concentrates continued to decline this week. Recently, offers for ordinary ore largely dropped to -$30 to -$40/dmt, while offers for Bisha ore fell to around -$50/dmt. However, due to the deteriorating SHFE/LME price ratio, some smelters opted to rush for domestic ore, and transactions of imported zinc concentrates were limited this week.

According to SMM, at around 11 PM on April 15, a fire broke out at the Viva Energy refinery in Geelong, Victoria, Australia, causing a partial shutdown. The refinery is one of only two still-operating refineries in Australia, supplying approximately 50% of Victoria's fuel and 10% of the nation's total fuel demand. Given the uncertain production situation and Australia's long-term reliance on diesel imports, the incident triggered market concerns over Australian lead and zinc ore supply, briefly pushing zinc prices above $3,400/mt. Attention going forward will be on the production and transportation of Australian zinc concentrates.

This week, SMM zinc concentrates inventories at main ports in China totaled 291,100 mt in physical content, down 6,900 mt in physical content WoW, with Lianyungang inventories contributing the main decline.