SMM: Why does Processing Fee of Zinc Concentrates Keep Lowering?

SHANGHAI, Nov.8 (SMM)－SMM learned that with continuous lowering processing fee of zinc concentrates at current 3,800-3,900 yuan per tonne domestically and $20-30 per dry tonne for imported zinc concentrates, SMM thinks:

On one hand, domestic mines are affected by green policies and security check, so the output increase is limited. SMM learned that mines output in Huayuan region of Hunan Province is still not stable. Sichuan Province is declining in mines supply due to security check. Zinc concentrates from North China as Shaanxi, Inner Mongolia is still in tense supply, with low processing fee. Also imported minerals keeps loss at about 800-900 yuan per tonnes currently. Imported zinc concentrates keep in short supply.

On the other hand, firstly, smelting plants have almost finished maintenance in November. Operating rate of domestic major plants have basically recovered to normal level. Since the operating level during first three quarters is not desirable, most smelting plants raise operating rate from Q4 to catch up with productive task, with some plants in full or over capacity. Secondly, with high price and good profits, smelting plants are willing to launch production. Thirdly, with winter coming, smelting plants begin to increase raw materials and store away for winter. Hence the zinc concentrates demand is rising.

SMM predicts, with winter coming and rising demand, the processing fee of zinc concentrates is probably declining in the short term.

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