The problem is that most of the marginal producers are in China and tend to be sticky. When a number are state funded entities they can keep producing longer than other producers with limited cash can stay solvent.
So much for Zinc TCs peaking as previously claimed by NCZ - you can also add Antamina to the list of low cost producers increasing volumes next year as they are likely going through a high zinc phase:
Fastmarkets’ zinc spot concentrate TC, cif China rose to a fresh high of $280-315 per tonne, from $270-305 per tonne in September.
Liquidity in the spot zinc concentrate market remains sluggish with smelters relatively well stocked, while enthusiasm from traders to pick up tonnes is low after a gruelling year of rising TCs and forward price backwardations.
A tender from miner Casapalca for zinc concentrate supply from November to March next year is currently in the latter rounds of bids and would provide an indication of where merchants see the market for the first quarter of next year.
That said, with interest low and TCs high, miners have been holding off making sales. Many who locked in double-digit TCs over the past few years are now having these multi-year contracts come to an end.
This could well mean that more concentrates get tendered on a quarterly basis while spot terms stay around the $300-per-tonne mark as miners let material go bit by bit in the hope that terms once again come down.
With TCs high, much has been made of how this could lead to the closure of some mines in higher quartiles of cost, but zinc miners have recently been enjoying a rising LME cash price, which traded at a four-month high of $2,555 per tonne on Friday October 25.
This, combined with higher lead and silver prices, is likely to encourage production.
“This is a good price for zinc compared with the last decade’s average and I’d be really surprised if some producers aren’t taking it and hedging forward,” a third trader said.
Some of the chatter at ILZSG was focused on how much additional zinc concentrate tonnage the world’s third-largest zinc mine Antamina will bring to the market in 2020.
Exact amounts will become clear over the coming weeks but are said to be over a hundred thousand tonnes of concentrates on top of current levels.
Antamina and other zinc concentrates high in copper content are still the premium tonnages traded in the market; offered spot TCs stand at around $270 per tonne, with Fastmarkets reporting deals as high as $280 per tonne.
More standard clean concentrate TCs are trading at around $290-305 per tonne, with less popular brands at $305-315 per tonne.
“Quality is the real driver at the moment and the established international brands still carry weight,” a fourth trader said.
Imported zinc concentrates into China in September totaled 294,668 tonnes, up 18.1% from 249,419 tonnes in August, Chinese customs data suggest.
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