Reuters) Updated: 2012-03-09 10:47 Counter:70 China's imports of zinc and raw material concentrates could climb if a key mine and zinc smelter do not reopen in three months, analysts and traders said on Thursday.
Shenzhen Zhongjin Lingnan Nonfemet, a major domestic metal producer, on Sunday shut its 200,000-tonne-a-year Fan Kou lead and zinc mine and 110,000-tonne-a-year Dan Xia zinc smelter for maintenance due to fears about lead pollution.
It did not say when it expects the mine and smelter, both located in Guangdong, to reopen.
"China's zinc imports will rise if Fan Kou is closed for three months," said Wang Chenyu, an analyst at Minmetals Futures, adding that a three-month closure would be long enough to tighten domestic ore supply and cut smelters' metal production.
A trader at an international trading house said Chinese smelters may start looking for imports if there is no clear timetable for Fan Kou's reopen in a month.
China, the world's top zinc producer and consumer, produced 5.34 million tonnes of refined zinc in 2011 with December reaching a monthly record of 514,000 tonnes.
Ample stocks and weak domestic demand mean Chinese importers are not keen to import refined zinc now, traders and producer sources said.
"We estimate over 1 million tonnes of zinc are stored in warehouses in China now," a manager at a large producer said.
He added that large smelters were continuing with normal production and that overall capacity had risen despite weak demand due to sluggish property sector.
Third month zinc contract prices on the Shanghai Futures Exchange have risen 6.3 percent so far this year, to trade at 15,730 yuan ($2,500) a tonne at 0704 GMT on Thursday, lagging a 10 percent rise in the benchmark three-month zinc contract on the London Metal Exchange.
The manager said strong demand for locally produced zinc concentrates had driven down treatment charges (TC), paid by miners to smelters for converting the concentrate into metal, to about 4,500 yuan a tonne currently, compared to the normal level of 5,500-6,000 yuan.
But those TCs are still higher than those for imports.
Overseas suppliers were indicating $60-$70 TCs for spot standard zinc concentrates to China, while Chinese buyers were seeking over $100 TCs, a level seen in December. ($1 = 6.3099 yuan)
KZL Price at posting:
16.5¢ Sentiment: None Disclosure: Held
