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Aug spot TCs for China zinc smelters dip to $50-$60/mt on tighter conc supply

Highlights

Spot treatment charges for clean, 50% imported zinc concentrates for China's zinc smelters fell to $50-$60/mt in August from $55-$60/mt in July due to lower domestic mined zinc supply, industry sources said Wednesday.

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Fees for June were $45-$55/mt, S&P Global Platts reported earlier.

"Some overseas mines are quoting TCs of around $50/mt for clean zinc concentrates this month, but there has not been a lot of deals done," said a concentrate dealer in northwest China said.

The fees offered for imported concentrates with higher impurities are higher at around $70/mt in August, he said.



The dealer said domestic concentrate supply was tightening in August as falling ore grades in the Inner Mongolia Autonomous Region, heavy rain in Yunnan province and environment protection monitoring in Sichuan province have cut output in three key zinc mining areas in recent months.

Major producer Jiangxi Copper in its August zinc sector report said imported mainstream zinc concentrate deals have been inked at around $50-$60/mt this month.

TCs, the fees paid to smelters by mines for converting concentrate into refined zinc, are a key source of revenue for smelters.

"Several key Chinese smelters advanced their annual term imported zinc concentrate talks with overseas sources this month, instead of in September and October as in past years, as they see near term concentrate supply staying tight," said a trader in Shaanxi who is close to major zinc smelters.

Another key Chinese zinc smelter, Shenzhen Zhongjin Lingnan Nonfemet Co. in Guangdong province, said in its August zinc sector report that overseas mines quoted fees of $50-$60/mt for China this month, noting that current TCs were lower due to continuing tightness in the globe's zinc concentrate supply.

The Guangdong producer forecast spot zinc TCs for China's smelters to remain low throughout the fourth quarter due to the anticipated output cuts by the small zinc mines in north China in winter.

China's national zinc concentrate imports rose 31% year on year to 1.3 million mt over January-June, General Administration of Customs data showed.

Zhongjin Lingnan said due to limited growth in China's domestic mined zinc output, low domestic zinc concentrate warehouse stocks and falling stocks at ports was prompting Chinese smelters to import more zinc concentrate to continue running. It forecast China's zinc concentrate imports would continue rising in coming months amid ongoing supply tightness.


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Jiangxi Copper said with the recent surge in refined zinc prices, some overseas mines have resumed output, so have extra concentrate to export to China. It said the frequent mine output cuts in China due to environment protection monitoring constrained domestic mined zinc output in H1 and spurred the import of concentrates.

Zinc concentrate supply in south China is tight amid environmental checks in Hunan, a key zinc mining province, according to Jiangxi Copper.

China's zinc concentrate output totaled 2.129 million mt in H1, down 3.4% year on year, data from the National Statistics Bureau showed.

The country's zinc concentrate demand is forecast at 5.43 million mt in 2017, down 6% year on year, by state-run metals agency Beijing Antaike.

It forecasts China's zinc concentrate output at 4.6 million mt in 2017, up 4.5% year on year, and net zinc concentrate imports at 900,000 mt, down 5%.

Beijing Antaike forecasts China posting a small zinc concentrate surplus of 70,000 mt for 2017, swinging from a deficit of 448,000 mt last year.

--Joshua Leung, newsdesk@spglobal.com
--Edited by Wendy Wells, wendy.wells@spglobal.com