Metal Products News
- Huludao keeping zinc capacity idle
Date: 15-Mar-2007 Sources: (Shenzhen Daily)
HULUDAO Zinc, the second-largest producer of the metal in China, has no immediate plan to restart capacity of 30,000 tons at a zinc smelter despite prices hovering at multi-year highs, a senior company official said.
Tight supply of zinc concentrate stands in the way of a restart, the official said, but Shenzhen-listed Huludao is still expected to produce about 20 percent more zinc this year as it ramps up operating rates at a new lead and zinc plant.
'There is a problem with raw materials. Supplies are relatively tight,'said the official, who declined to be identified.
The idle capacity is part of a 130,000 ton-a-year zinc smelter, which was shut in 2001 due to low zinc prices and insufficient supplies of concentrate. Huludao has since reopened 100,000 tons of capacity.
The benchmark three-month zinc contract of the London Metal Exchange hit a peak above US$4,500 a ton last year. The price has dropped 24 percent this year to US$3,210 yesterday, but still stands around 170 percent higher than at the start of 2005.
China is a major zinc producer but produces only about two-thirds of the concentrate it needs. Chinese demand has eaten into supplies of zinc concentrate globally in the past two years. Strong prices are prompting mines to raise ore production, pushing up processing fees.
Domestic zinc smelters are receiving treatment charges, which are paid by overseas sellers to smelters, of US$270 to US$280 a ton for processing imported zinc concentrate, against less than US$200 in the October-December quarter last year, traders say.
The Huludao official said the company might restart the 30,000 tons of capacity when market conditions improve.
'We do not have a plan now. But maybe soon we will be operating the full 130,000 tons of capacity. It depends on market conditions,'he said.
Operations at Huludao's other 200,000 ton-a-year zinc plant and a new 90,000 ton-a-year lead and zinc plant were running at full rates.
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