A ramp-up in Chinese zinc production is expected to accelerate from the second quarter of this year, boosted by the completion of upgrades at smelting facilities across the country and a surge in treatment charges (TCs) amid a relatively oversupplied raw materials market, sources told Fastmarkets.
A large amount of refined zinc capacity in China has been shut or suspended over the past two years due to not being compliant with stringent new environment regulations, while the introduction of supply-side reforms by authorities has also contributed to a significant reduction in output.This resultant drop in demand for zinc concentrate from domestic smelters is said to be a major driver behind the recent surge in TCs - the fees miners pay smelters to process their ore. Since bottoming out early last year, spot zinc TCs in Asia have increased by more than tenfold against a backdrop of rapidly rising raw material supply in line with the commissioning of major zinc mines such as Gamsberg in South Africa and Dugald River and Century Mine in Australia amid higher prices for refined metal.Fastmarkets most recently assessed spot zinc concentrate TCs, cif Asia Pacific, at $215-250 per tonne on February...