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Key takeaways:
Teck has, for the past few months, been haggling with smelters in China on how to share the cost from China’s 10% tariff on US exports. The Canadian copper, zinc and lead producer ships concentrates from the Red Dog mine to smelters in China only during a short, four-month window from July to October, owing to challenging weather conditions.
Various market sources told Fastmarkets that two buyers of the Red Dog zinc concentrates, Nandan Nanfang smelter in Guangxi Zhuang Autonomous Region, and Zhuzhou smelter in Hunan province, both in southern China, are reluctant to carry the additional cost from the 10% reciprocal tariff on their books, and want Teck to bear the cost.
“Teck has not yet reached an agreement with its Chinese buyers about how to deal with those concentrates, and so far, [has not come to a] detailed consensus on shipments,” a trader source told Fastmarkets.
A spokesperson for Teck said the company doesn’t comment on commercial negotiations.
“Zinc concentrates are in high demand, and we have successfully developed a regionally diverse customer base, giving us greater optionality while trade discussions continue,” the spokesperson said.
“The shipment season from Red Dog commenced in July and there has been no effect on shipments during this year’s shipping season,” he added.
Fastmarkets’ twice-monthly assessment of the zinc spot concentrate TC, cif China stood at $80-95 per tonne on Friday August 29, up from $70-90 per tonne on August 8.
Treatment charges (TCs) are the fees that mining companies pay to smelters to process concentrates into refined metal. Typically, tighter spot supply leads to a drop in spot TCs, and easing supply supports the TCs to move upward.
While the smelters are obliged to take the concentrates, Teck has not yet been able to reach a deal, a source in Europe told Fastmarkets.
“A big difference is in how to handle the effect of tariffs on the product,” the industry source said. “They have not reached agreements with customers on how to handle that, and the Chinese smelters are pushing back.”
Teck has a deal with Chinese smelters to ship about 100,000 tonnes of zinc concentrates from the Red Dog mine, sources told Fastmarkets.
“The tariffs are causing some issues, and they (Teck) are being squeezed a bit more – so far there is no confirmation on how to split the tariff,” a separate market source said.
Chinese smelters have been able to take a hard bargaining position against Teck, as traders say the market is well-supplied, with stock at ports and smelters currently at healthy levels.
“We continue to prioritize flexibility and resilience in our marketing and logistics to ensure we can respond effectively to evolving trade dynamics,” the Teck spokesperson said.
The demand for imported zinc concentrates is due to remain robust in coming months, market sources said, as smelters always start to restock in advance of production during wintertime, which may tighten the market supply, and add some pressure to the further increase of TCs.
At the same time, demand for concentrates is being helped as new smelting capacity comes online this year, according to industry sources.
New smelting projects from Wanyang Group in Henan province, central China, and Yuntong Zinc Industry Co in Yunnan province, southwest China, that will provide an estimated yearly output capacity totaling over 350,000 tonnes of zinc commenced mid-2025, the sources said.
Still, Teck reached an agreement to ship lead concentrate to Chinese smelters, sources said, after agreeing a deal to equally share the cost of the 10% China tariff with smelters.
The supply of lead concentrate has tightened, with smelters scrambling to secure material – also an attractive prospect because of byproducts, including silver, whose prices are rocketing.
Fastmarkets assessed the lead spot concentrate TC, high silver, cif China at $(100)-(130) per tonne on August 29, down from $(110)-(80) per tonne a month earlier.
Fastmarkets assessed the lead spot concentrate TC, low silver, cif China at $(70)-(90) per tonne on August 29, also down from $(80)-(60) per tonne on July 25.
Fastmarkets’ zinc and lead price data combines the intelligence of some of the industry’s leading brands such as Metal Bulletin, American Metal Market (AMM), Scrap Price Bulletin and Industrial Minerals. Find out more about our zinc prices here.