China’s refined zinc output stood at 458,400 mt in February, down 59,200 mt or 11.43% MoM and 2.72% YoY. From January to February 2022, the combined refined zinc output stood at 976,000 mt, a decrease of 3.7% year on year.
SMM survey showed that the MoM decrease in domestic refined zinc output in February was more than expected. The decrease was the result of multiple factors. First of all, Inner Mongolia Zijin went through a small-scale overhaul, and the output recorded a month-on-month drop. Routine maintenance of some smelters in Yunnan as well as the production cuts of one smelter for lack of ore lowered the local output. Some small and medium-sized smelters in Hunan suspended the production for Chinese New Year holiday in late January, and will not resume the production until mid-March or end of the month, resulting in major reductions. Some small and medium-sized smelters in Sichuan suspended the production until mid-February. The smelters in other areas were also closed for the holiday. In addition to the above factors, less working days in February was the main reason that reduced the output as a whole. The market still saw some increase in output. Some smelters in Shaanxi ramped up the production or resumed full production, which contributed most of the increases.
China’s refined zinc output is expected to be 528,500 mt in March, a significant increase of 70,200 mt from February and up 6.37% or 31,700 mt YoY. From January to March 2022, the combined refined zinc output is estimated to be 1.51 million mt, a decrease of 0.39% year on year. The YoY increase is possible mainly because the output in Inner Mongolia in the same period in 2021 was low due to energy consumption control. And the MoM growth is a result of multiple factors. For example, Huludao Zinc resumed normal production; Some smelters in Shaanxi will further lift the production; Inner Mongolia Zijin will complete the overhaul and resumed normal production; some small and medium-sized smelters in Hunan will resume the production in mid-March or the end of March; The smelters in Guangxi plan to resume the production around mid-March; The production in other areas will also be resumed after the Spring Festival. The most important reason is still the working days, which return to normal level in March. On the other hand, some small and medium-sized smelters in Sichuan will be shut down for maintenance in March; while some in Gansu underwent maintenance in the month, resulting in potential reduction in output.