2021 16th China Lead-Zinc Summit: Global zinc concentrate demand and supply to be in tight balance in 2021

SHANGHAI, May 18 (SMM)—Zinc concentrate shortage may reach 21,000 mt in 2021, said Zeng Zihang, SMM senior analyst of the zinc industry.

Speaking at the 2021 16th Lead-Zinc Summit, jointly organized by the Shanghai Futures Exchange and SMM in Fujian Xiamen on May 17, Zeng said that most of the new zinc mines in 2021 are in overseas areas. After these expansion, global zinc concentrate output is expected to increase by 250,000 mt (Zn content), and domestic output to rise by 203,000 mt (Zn content). China’s refined zinc output is likely to reach 6.43 million mt in 2021, and global output is expected to increase by about 3.2%.  

The increase in global zinc concentrate supply is limited. Demand and supply to be in tight balance in 2021

As zinc mines have recovered and imported materials flowed into the domestic market, zinc concentrate shortages were eased significantly compared with last year. Treatment charges rose slightly in May.

Zinc concentrate profits have risen to above 7,000/mt (Zn content) currently. However, domestic mines are not profit-driven, and they usually adjust their production according to the season and state polices.

China’s dependence on imported zinc concentrate has further increased in 2021, with imports rising as high as 12.7% in the first quarter.   

An SMM survey showed that most of the zinc mines have returned to normal production in 2021, and operating rates in May are expected to recover to pre-CNY level. 

A supply glut of zinc ingot to continue

At the beginning of 2021, some smelters controlled production due to zinc concentrate shortages. During April-May, many secondary zinc plants reduced or suspended production because of local environmental inspections.

However, as prices of by-products such as sulphuric acid and small metals trended higher, profits of smelters were decent, which encouraged them to step up production. SMM expects that China’s refined zinc output is likely to reach 6.43 million mt in 2021.

End-user consumption weakened as raw materials prices surged

Surged raw materials prices and implementation of the export tax rebate reduction policy weighed on galvanising orders. 

According to SMM's weekly survey of large galvanizing plants, the biggest problem currently faced by them is the hiking finished product inventory. If end-user consumption fails to improve in the future, plants will have to reduce production. 

Consumption of zinc oxide was relatively stable. Operating rates fell slightly in April due to environmental inspections and maintenance, but are expected to trend higher in 2021.