SHFE Zinc Price to Grow on Possible Production Reduction in Yunnan Province

SHANGHAI, Feb 27 (SMM) - Recently, there are rumours in the market that the power rationing in Yunnan has led to production cuts in zinc smelters. According to SMM survey, some smelters in Qujing City intended to overhaul in March in advance due to the power rationing, and others may reduce the production by around 10-20%. It is estimated that the capacity loss caused by power rationing will be 5,000-6,000 mt per month. Smelters in other regions in Yunnan have not received notices of production cuts. In addition, a smelter in Honghe Prefecture plans to conduct routine maintenance for one month in March, and the estimated capacity loss will exceed 6,000 mt. The zinc ingot inventory also hovered around low levels. In such a context, zinc prices may soar to more than 24,000 yuan/mt amid the relatively vigorous demand.

SHFE zinc is expected to trade between 23,000-24,300 yuan/mt this week, and LME zinc will move between $2,950-3,150/mt.