China is expected to eliminate an estimated 500,000 mt/year of high cost zinc smelting output capacity in 2016, Shanghai Metal Exchange said in a report in its website Monday.
The capacity withdrawal is to keep in line with the Chinese government's supply-side structural reforms that emphasize elimination of capacity and product inventories, as well as lowering production costs.
The exchange report cited Peng Tao, Secretary General of the lead and zinc division of China Nonferrous Metals Industry Association saying the Chinese zinc smelting sector can only be made more concentrated by monitoring the country's total smelting capacity, preventing capacity surplus.
He noted that in recent years, the costs of energy, labor, tax and finance increased each year, so enterprises have to use various means to trim costs as well as prevent market risks.
China's refined zinc surplus is expected to widen to 670,000 mt in 2016, from a surplus of 451,000 mt in 2015, state-owned metals consultancy Beijing Antaike said in its zinc sector report in February.
The agency forecast China's 2016 refined zinc demand to be 6.3 million mt, marginally up from 6.28 million mt in 2015.
Antaike predicted China's 2016 refined zinc output to be 6.4 million mt, up 3% from 2015. It forecast China's net refined zinc and zinc alloy import volume in 2016 to be 550,000 mt, up 7.8% from 2015.
