Chinese zinc smelters agree to adjust maintenance plans, Antaike says
BEIJING, Aug 22 (Reuters) -Major Chinese zinc smelters agreed to adjust planned maintenance on production lines and postpone commissioning of new capacity, state-backed research house Antaike said on Thursday, as falling ore processing prices have eroded the sector's profits.
Treatment charges (TCs), or the price smelters receive from miners to process ore concentrate into zinc, have been falling since the fourth quarter of 2023 due to tight ore supply.
Such charges rise during times of raw material surplus and slide during periods of shortfall.
The agreement was reached among 14 smelters on Wednesday at a quarterly industry meeting in the country's northern region of Inner Mongolia, Antaike said in a statement on its WeChat account, adding that the smelters at the meeting accounted for about 70% of China's primary zinc smelting capacity.
China is the world's biggest producer of zinc, which is also used to make galvanised steel. The country produced 4.09 million tons of the metal in the first seven months of the year, up 5.1% year-on-year, official data showed.
"Ore supply remains tight. The second-quarter ore output among major overseas miners all posted annual drops, with falling ore grade and unexpected maintenance curbing supply. It's hard to see TCs ticking up in the short term," analysts at SDIC Essence Futures said on Wednesday.
China's imports of zinc concentrates dropped 4.8% annually in July to 375,373 tons, according to customs data.
Smelters at the meeting also discussed the possible establishment of a floor pricing mechanism for zinc concentrate TCs, Antaike said, without providing any further details.
Shanghai's most active zinc contract SZNcv1 rose for a second straight session on Thursday to hit an intraday high of 23,795 yuan a ton, the highest since July 18.
Reporting by Amy Lv and Siyi Liu in Beijing and Tony Munroe in Singapore; Editing by Shounak Dasgupta
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