But TCs, one of the main sources of income for smelters, fell for the first time since May last year to 5,050 yuan a tonne in March as their demand for zinc concentrate rose. "We expect the spot TCs to fall gradually in the coming months, due to higher utilisation rates at smelters in China and outside of China," said analyst Dina Yu of CRU Group in China. As China enters its traditional peak demand season for refined zinc and amid an economic rebound post-COVID, smelters in China are likely to keep their machines humming. SHFE inventories of refined zinc surged 582% from December 2022 to 123,894 tonnes by March 10, exchange data showed, correlating with the ramp-up at smelters. But as demand for refined metal picked up, SHFE stocks fell 8.4% last week, their biggest weekly decline since Dec. 23. Spot TCs could also fall further if smelters in Europe and the United States resume production, said a source at a zinc smelter in China, after many cut output last year due to high electricity costs.
China's concentrate market was over-supplied partly due to smelters shutting down in Europe. The country imported 4.12 million tonnes of zinc concentrate last year, up 13% year-on-year. In the first two months of 2023, imports surged 30% year-on-year to 902,000 tonnes. Citi analysts expected global refined zinc supply to grow 4% this year on potential stronger output from both China and Europe, where power prices have softened. "If European zinc smelter output fails to recover as we expect then we could see stronger China output compensate for this anyway, incentivised by higher treatment charges and the surplus in the global concentrate," they said in a note.
Average utilisation rates at Chinese smelters are expected to rise to 83% in 2023 from 79% a year earlier, said Andrew Thomas, head of lead and zinc at Wood Mackenzie.
However the fall in spot TCs in China will likely be minimal. "With the global concentrate market set to see its second consecutive year of surpluses, treatment charges will remain supported," Thomas said. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ China zinc concentrate treatment charges Shanghai Futures Exchange refined zinc inventory China's imports of zinc concentrate ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Mai Nguyen in Hanoi; Editing by Jan Harvey)
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