IZA China Update
May 2013
Zinc Industry Overview China has become one of the most expensive countries for coal, coke, electricity, water, gas and other auxiliary materials. Labor costs are also rapidly rising. High operating costs, coupled with low treatment charges and depressed zinc prices made 2012 a very difficult year for many Chinese zinc smelters. China’s two biggest zinc smelters, Zhuzhou Smelter and Huludao, both incurred large deficits in 2012. Huludao’s deficit amounted to 3.7 billion RMB, while Zhuzhou reported a loss of 619 million RMB. As a consequence Huludao, which has incurred a deficit for three consecutive years, was delisted from the Shenzhen Stock Exchange. Zhuzhou is also facing the risk of being delisted from Shanghai Stock Exchange if they cannot reverse losses in 2013. Chinese zinc mining companies faired better than smelters in 2012, mainly as a result of by-product recovery including gold, silver and indium. Total zinc production in China during 2012 was 4.83 million tonnes - 7.5% lower than 2011 - marking the first year since 1983 that Chinese zinc production fell. The production of zinc concentrate was 4.93 million tonnes (zinc metal content). There was a minor import of zinc concentrate because Chinese companies could not get the bench price and treatment charges from the world market. Domestic
concentrate was relatively inexpensive and there were sufficient stocks. A number of Chinese zinc companies have expressed interest in direct negotiations with foreign mining companies and establishing long- term business relationships. To this end, IZA China and SMM (Shanghai Metals Market Information & Technology Company) organized a Chinese delegation of eight representatives from Chinese zinc smelters to attend IZA’s International Zinc and Zinc Oxide Conferences in February, 2013. The participants were pleased with the results and said they would attend this conference again.
2013 Zinc Market Forecast Based on presentations from two key IZA-sponsored conferences, CBI Metal Week (Shanghai, March11-13) and the SMM Lead and Zinc Summit (Shanghai, March 21-23), the potential for growth in China’s zinc demand during 2013 is encouraging. The Chinese Government is expected to invest in significant new infra-
structure projects, including high speed rail, high voltage and ultrahigh voltage power grids, wind energy, airport’s, highway’s and continued urbanization. These investments, and expanding capacity in the Chinese automotive industry is projected to add more than 2 million tonnes of zinc demand over the next 5 years.
Also in this issue: 2
Galvatech and AP Galva 2013 Announcement
2
GAP Meeting
2
Wind Energy
3
Zinc Die Casting
4
Galvanized Rebar
5
Update on PUP
5
Yau Sang Galvanizers joins IZA
5
Promotion of Zinc Fertilizers in China