Zinc concentrate imports didn’t shrink, despite limited arbitrage opportunities

SHANGHAI, Oct 29 (SMM) – Even though the import arbitrage window remained closed for much of the time, China’s imports of zinc concentrate held stable this year, with a monthly volume of 82,000-137,000 mt in Zn content.

This pointed to strong demand from Chinese zinc smelters, as high profits encouraged them to swing to high gear.

Customs data showed that China imported 884,000 mt in Zn content of zinc concentrate in the first eight months of 2019, slightly up from 883,000 mt in Zn content in the same period last year. This was a sharp increase from 647,000 mt in Zn content in January-August 2017.

In January-August 2019, 75.12% of refined zinc was produced from domestic zinc concentrate. This was marginally up from 74.09% in the same period 2018, but sharply down from 80.15% in the same period 2017.

A separate SMM survey showed that profits on imported zinc concentrate were negative in nearly 67% of the first eight months of this year.

Treatment charges for zinc concentrate remained steady, while zinc prices weakened. This kept smelter profits healthy, but squeezed Chinese miner profits, limiting the growth of production across mines domestically. Environmental restrictions also deterred domestic zinc concentrate production from significantly expanding.

The latest SMM survey showed that zinc production across Chinese smelters reached a record high in September.