Spot zinc TCs rise in China on increased supply

Zinc treatment charges (TCs) have gone up in China on increased concentrate supply from both home and abroad, sources told Metal Bulletin.

Spot TCs for imported concentrates of 50% zinc were offered at $135-145 per tonne cif Chinese ports this week, $5 higher than last month. This was largely in line with the 5.9% jump of benchmark deals announced recently.

Teck agreed to sell zinc concentrates to Glencore through 2014 with treatment charges set at $223 per tonne, higher than the $210.5 benchmark settled last year with Korea Zinc.

“The trend is definitely pointed towards the upside with increased concentrate supply but the wide spread between the amount Chinese smelters pocketed and the benchmark set on the international market is likely to persist,” one trading source said.

“Last year, Chinese smelters were only able to fetch something around $100. Chinese market is decoupled from the rest, it is like the iron ore market with overseas miners still having the upper hand in negotiations,” he added.

“Imported concentrates accounted for one million tonnes while domestic concentrates were 4.6 million tonnes,” a Shanghai-based analyst added.

China imported 1.2 million tonnes of zinc concentrate in 2013, 3% higher than the previous year.

“It is a rough estimate, grades of imported material vary widely,” the analyst said 

Prices for domestic concentrates have jumped to 5,000-5,200 yuan ($810-843) per tonne, up 200-300 yuan from last year’s level.

“Supplies from domestic mines have increased markedly making smelters better positioned to get favourable TCs,” a third source said.

“This can be underpinned by smelters willingness to increase output,” the source added.

Prices have been settled at 4,900 yuan per tonne for material containing high levels of silver and indium.

Hsikwagshan Twinking Star will increase the purchase of high-indium containing zinc concentrates in 2014, according to the company.

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