Spot treatment charges for imported zinc concentrate paid to Chinese smelters remained flat at around $125-140/mt in January, unchanged from December, in thin trade and with ample domestic supply, industry sources in China said Tuesday.
Chinese traders said spot imported zinc concentrate trade was thin ahead of the Lunar New Year holiday January 31-February 6.
A zinc concentrate trader based in China's Shaanxi province reported no spot deals in January.
"Most zinc smelters in China had stocked up ample supply of the raw material before the long holiday and they are in no hurry to buy," he said. "Chinese smelters are discouraged from importing zinc concentrate as it's cheaper to get the raw material in the domestic market."
The trader added that most Chinese smelters will only be able to get more financing from banks for raw material purchase after the festive season. "Smelters generally have tight budgets before the Lunar New Year holiday. Spot trade will only start to become more active after February," he said.
In central China's Henan province, a zinc concentrate trader said: "I heard some Chinese smelters are asking for higher TCs at around $150-160/mt as they are bullish about the market outlook. Current zinc concentrate supply is abundant in China and smelters will only consider to import the raw material unless TCs rise more, so I think it's possible to see higher TCs later this year."
A smelter source based in China's Sichuan province said the future direction of TCs would depend on overseas zinc price movements and demand and supply fundamentals in China.
"It is too early to predict the market direction for now as the spot market is at a standstill before the long holiday," she said, adding that her company had reported no spot deals this month while spot TCs were heard steady at around $130-140/mt, unchanged from a month ago.
"There may be some small deals done in the market, but TCs are hardly changing much in a quiet market," the smelter source added.
TCs, the fees charged to miners by smelters to treat their concentrate to produce metal, are a key source of revenue for smelters. The TCs typically rise when there is more concentrate supply and decline when there is less.
Latest figures from the General Administration of Customs showed China imported around 1.99 million mt of zinc concentrate in 2013, up 2.8% year-on-year.
