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Report On Refined Zinc Production In China In October 2018

According to ATK’s statistics of refined zinc production of 45 smelters in China with a total capacity of 6.18 million tons, from January to October, 2018, the total production of zinc and zinc alloy of said smelters reached 3.728 million tons, with a YoY decrease of 4.6%, namely 0.179 million tons. Specifically, the production in October was 0.39 million tons, with a YoY decrease of 11%, a M-o-M increase of 25,000 tons and a D-o-D increase of 6.8%. The amended total production from January to September, 2018 was 3.338 million tons, with a YoY decrease of 3.8%.

In October, 2018, except downtime of Yuguang Gold & Lead and Yunnan Chihong Zn & Ge due to maintenance and rigid production reduction of individual enterprises, other major smelters in China maintained a high runtime level. Specifically, new capacity of Sihuan Zinc & Germanium and Baiyin Non-ferrous has seen a stable production status, and smelters in Yunnan, Sichuan, Inner Mongolia and Guangdong implementing flexible production in early period due to environmental protection and profit requirements have actively increased production to meet the annual objective. Overall, the production increase driven by profit has emerged. However, in October, the production of most smelters saw a gap with the highest production in Q4 2017.

In October, 2018, the zinc production in China realized a M-o-M increase of 20,000 tons. Despite the supplement of imported zinc ingots, the total inventory of three sites and one bonded zone in China still saw a decline. Overall, the zinc consumption in China in October was satisfactory. By the end of 2018, low inventory level will underpin the zinc price. The supply of imported ores and domestic ores will be sufficient, the profit of smelters will keep at a high level, and the effective capacity in production provides conditions and room for further capacity expansion. However, Zhuzhou Smelter will gradually reduce its smelting production according to schedule, Wenshan Zinc & Indium is still at the stage of system commissioning without any stable capacity, and western Hunan has a limited restorable capacity. Moreover, on November 5, 2018, the second round of environmental review has kicked off in 10 provinces. The supervision action will be implemented till early December, so individual regions may be temporarily affected by the supervision.

Overall, after the significant production increase in September and October, the production of refined zinc of major smelters will see limited increase, with the monthly production of around 0.4 million tons.