Zinc concentrate treatment charges decreased MoM with the tight supply

SHANGHAI, Sep 22 (SMM) — Treatment charges (TC) of domestic zinc concentrate has shown a general downward trend since August 28, according to an SMM survey. Treatment charges of domestic zinc concentrate stood at 5,300 yuan/metal mt as of September 18, 250 yuan/metal mt lower than that of August 28.

Zinc concentrate treatment charges (yuan/metal mt)

Source: SMM

Output of zinc concentrate stood at 280,300 mt in August, down 3.1% from the previous month and down 22.1% from the previous year, according to an SMM survey. The recovery at the ore end was weaker than expectations due to the pandemic. Treatment charges of imported ore has been declining since August, which reflects the tight supply of imported ore to a certain extent, and the balance of domestic ore needs to be adjusted by imports. The decrease of imports led to an increase in the demand for domestic zinc concentrate. That also accounted for the tight supply of domestic zinc concentrate.

Although treatment charges of domestic zinc concentrate fell month on month, it was still at a high level and up 300 yuan/metal mt compared with the lowest 5,000 yuan/metal mt in the year. Combined with zinc prices generally showing an upward trend. The production enthusiasm of smelters improved due to the high profit. Output of refined zinc is rising continuously. It is estimated that output of refined zinc will increase 36,900 mt to 545,900 mt month on month. Some smelters are worried about the shortage of ore supply in Q4 and the advance of winter stockpiling time. The high demand of smelters in the near term led to the tight supply of zinc concentrate and the decrease of treatment charges to some extent.