zinc price, page-5

China's lead, zinc producers jointly cut production to fight price slump
(www.chinamining.org)
Updated: 2008-07-15 08:55
Counter:1398

A number of Chinese lead and zinc producers recently agreed to cut output by 10 percent in July-September slack season to stop the sliding price since 2007, China Securities Journal reported Monday.


Altogether 27 lead and zine producers have gathered in Shanghai to make the decision. They believed that the move would help improve the supply-demand relation so as to curb further price fall.


The price of 0# zinc ingots has fallen by 53.42 percent from 33, 360 yuan/ton to 15,650 yuan/ton since last May, while that of 1# lead ingots has dropped by 34.74 percent from 26,500 yuan/ton to 16,500 yuan/ton.


The price decline did not only heavily press down on the smelting plants but also transferred onto mining companies, which set the selling price with SMM average price in the coming month minus fixed processing expense. But the sharp price slump has urged many mining companies to shut down.


However, the outcome of the 27-member agreement is in doubt as the industry's top 3 companies in output failed to attend the meeting and it is still unknown if they will act with the others.


Besides, the smelting capacity of lead and zinc continues increasing.


According to China Nonferrous Metals Industry Association, domestic lead consumption shrank 50,000 tons in January-May, but new projects were on road in Shaanxi, Hunan, Yunnan and Gansu provinces.


If the government's policy on the industry is unchanged and the production expansion is going on, lead and zinc companies are expected to face tougher time next year, said Zhang Xiaohua, vice general manager of Hanzhong Bayi Zinc Industry Co., Ltd.


Earlier, 20 Chinese aluminum companies declared on July 10 to cut their production by 5-10 percent, which triggered LME aluminum price up 100 US dollars to hit record 3,380 US dollars.