SHANGHAI, Apr 2 (SMM) - In April, SMM's monthly TC for domestic zinc concentrate was reduced again to 3,700 yuan/ton with metal content, and the imported zinc concentrate TC was reduced to US$65/dmt. The tight supply of the zinc concentrate market has not changed.
Recently, news from overseas mines has been frequent, with news about production resumption and shutdown intertwined. First, the Canadian government announced that it would re-grant the operation license of the KZK zinc, lead and copper project of Canada's BMC Mining Company. The project will produce 235 million pounds of zinc, 32 million pounds of copper and 56 million pounds of lead with a service life of 9 years. The market expects mines’ supply will recover in the long run; however, there is more news about production reduction and suspension. Recently, Volcan announced the suspension of three mines in San Cristobal, Carahuacra and Ticlio of its Yauli Mining Division. The total zinc concentrate output of these three mines in 2023 was 104,300 tons. The production suspension will last for up to 30 days and is expected to affect about 8,000 tons of output. Then in mid-March, Glencore suspended production at the McArthur River zinc mine due to flooding. The mine’s zinc concentrate output in 2023 was 262,200 tons in metals. Nexa announced that mining operations at the Morro Agudo mining area in Brazil will be suspended from May 1, and mining activities will be reduced from March 19 to April 30. The Morro Agudo mining area produced 23,000 tons of zinc concentrate and 8,300 tons of lead concentrate in 2023. Although the SHFE/LME zinc price ratio is relatively high recently and the window for imports has been opened briefly, port inventories are still relatively low recently and the current shortage of ore continues.
Ore supply was and will be still in short supply in March and April. Affected by this, SMM estimates that the output of smelters in April will still be around 500,000 tons, and the output level will still be relatively low. Recently, Hunan Zhihong Mining Company's Danaopo lead-zinc mine passed the environmental impact assessment. The mine is expected to produce nearly 100,000 tons of zinc concentrate in metals annually.
According to SMM's survey, most of the domestic companies that had reduced or suspended production previously will resume production in April. However, output may not return to normal until late April or early May. Under the influence of multiple factors, SMM expects the inflection point of TCs to appear in May at the earliest.
