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Zinc price decline squeezes China smelters, mines

October 08, 2008 - 07:28 GMT Location: Shanghai

KEYWORDS: zinc , China , smelter , shut down , cost

Falling zinc prices have reportedly forced 60% of China's zinc mines to close, as smaller smelters are driven out of action and bigger ones cut production.

In Yunnan province, China's biggest zinc-producing region, market participants said around four fifths of smelters with capacity of 10,000-20,000 tpy have already shut down. "They are already in debt due to lower zinc prices recently. Some have been closed for more than two months," he said. The trader told MB the production cost for such smelters is around 17,000 yuan ($2,493) per tonne. The spot price of zinc in Shanghai was quoted at 12,650-13,650 yuan per tonne on Wednesday. "The fall in zinc price will help industry consolidation in China. The majority of Chinese zinc smelters are making a loss at current prices," said Li Kun, vice-gm at Sichuan Hongda Co, a big smelter in Sichuan province. Li said that in contrast to weak zinc prices both at home and abroad, zinc...

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