China Zinc Producers to Discuss Output Cuts, Executive Says
By Li Xiaowei
July 11 (Bloomberg) -- Zinc smelters in China, the world's largest producer of the metal, will meet to consider production cuts as falling prices cause losses, a company executive said.
Producers including Sichuan Hongda Chemical Industry Co., and Henan Yuguang Gold & Lead Co. are meeting this weekend to discuss what other measures to take, the official said, declining to be named as his company wasn't invited to the talks, which are private. The official spoke earlier in the day to smelter executives who will attend the meeting.
Privately-owned small-to-medium sized smelters are likely to reduce output as losses mount when prices fall below production costs, the executive said.
Calls to Sichuan Hongda and Henan Yuguang Gold & Lead Co. were unanswered.
Zinc, used to galvanize steel, has declined 15 percent on the London Metal Exchange this year amid excess supplies. Some small producers have lowered production rates since last month, researcher CBI China Co. said on June 19.
Zinc rose by the exchange-imposed daily limit in Shanghai on concern producers in China may follow a move by aluminum makers to cut output because of a power shortage in the country.
China's zinc producers may be meeting this weekend and the issues of power problems and possible production cuts may be discussed, Pang Ying, analyst at Shenzhen Rongtuo Trading Co., said.
Zinc for September delivery on the Shanghai Futures Exchange, the most-active contract, rose as much as 605 yuan, or 4 percent, from the previous settlement to 15,805 yuan ($2,312) a metric ton, the highest since July 3. The contract ended at 15,655 yuan.
To contact the reporter for this story: Li Xiaowei in Shanghai at [email protected]
Last Updated: July 11, 2008 07:08 EDT
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