ZINC - Market Report 27 September 2019 Spot zinc concentrate TCs Location measure Today's Price Previous Price Change Quarter Average Previous Quarter Year Average Zinc maximum assessment CIF China $/t 305.00 305.00 0.00 300.00 300.00 89.17 Zinc minimum assessment CIF China $/t -5.00 270.00 270.00 70.83 0/0 6750.00 6750.00 6688.89 0/0 6466.67 6466.67 6311.11 Delivered North China yuan/t Delivered South China yuan/t 270.00 275.00 6,600 / 6,900 6,400 / 6,600 6,600 / 6,900 6,400 / 6,600 2019 2018 2017 2016 2015 2014 2013 245.00 147.00 172.00 203.00 245.00 223.00 210.75 Annual Zinc Concentrate TCs MARKET COMMENTARY *Fastmarkets prices spot zinc concentrates within a 13 week window* Spot Zinc Concentrate Key Points: Fastmarkets spot zinc concentrates treatment charges(TC) dropped slightly in Sept to $270305/t, marking the first decline in five months. The market was assessed at $275-305/t in Aug. This month, a cargo of Antamina was traded in the Chinese market slightly below $260/t, a tender for Yauricocha concentrates was said to be concluded at $320/t. Business were concluded at either side of the Fastmarkets range for Peruvian material. Business remains slow but traction starting to build at lower levels with Chinese smelters now competing to purchase prime concentrates. Bids at above $300/t from smelters are commonly seen while non-Chinese smelters are largely out of the spot market. “There is another factor at play: As zinc price fell in China since mid-Sept, Chinese zinc smelters are more flexible to adjust lower the TC.”- smelter Zinc Concentrate Indicators Zinc Concentrate CIF China 350 300 250 200 150 100 Zinc Maximum Zinc Minimum 50 0 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Zinc Concentrate dlvd China 7500 7000 6500 6000 Domestic TC for Northern China is flat at 6,600-6,900 yuan/t in Sept with eyes on whether the availability will shrink as winter approaches. Southern China TC also stayed unchanged at 6,400-6,600 yuan/t. 5500 5000 Delivered North China [MAX] Delivered South China [MIN] 4500 “Zinc mines in Inner Mongolia have already stopped operation ahead of National day holidays, there has been less stock in northern China. There is not many concentrates in Lianyungang at all.”- trader. Three week strike at Sumitomo’s San Cristobal zinc mine in Bolivia ended in the first half of Sept, FM lifted soon after Newmont Goldcorp suspended production at its Peñasquito mine in Mexico due to a community blockage, the company said in mid-Sept. The mine was was closed throughout May and most of Jun over the same issue. Industry participants are looking to gather at 22nd International Zinc & Lead conference in Kunming of Yunnan province from Oct 14-Oct 17, starting discussion on annual contractual terms. Ahead of National day holidays starting Oct 1, SHFE zinc inventories dropped to 67,200t as of Sept 27, versus 79,393 tonnes a week ago. Backwardation in LME cash-3month spread widens to $50/t Context for annual TCs 4000 3500 3000 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Zinc Concentrate Tenders Casapalca - 17-18kt Oct '19 - Mar '20 - under offer Yauricocha - 1kt - awarded $320/t CIF China equivalent Bisha - 30kt Q4 '19, 10kt Q1, 10kt Q2 - said to be awarded at $290-300/t *Mined zinc and lead concentrate tenders can sometimes include alternative base and precious metal payables, payment terms, penalties and other factors that have an impact on TCs. Teck agrees TC of $245/t with Korea Zinc basis a zinc cash price of $2,700/t, de-escalators set at -2% below $2,700/t, 0% between $2,700/t and $3,000/t, and +5% above $3,000/t. Japanese smelters follow in several contracts forming ‘Asian Benchmark’ but Mitsui Mining & Smelting deals directly with Teck at $248/t TCs, BP $3,000/t with zeroed scales. Nyrstar follows Teck-KZ number + scales in Europe, recognised as benchmark level. LEAD - Market Report 27 September 2019 Spot Lead Concentrate Location Measure Today's Price Previous Price Change Quarter Average Previous Quarter Year Average Max. High Silver Lead Concentrate TCs CIF China $/t 120.00 80.00 +40.00 91.67 91.67 32.08 Min. High Silver Lead Concentrate TCs CIF China $/t 100.00 50.00 +50.00 66.67 66.67 17.08 Max. Low Silver Lead Concentrate TCs CIF China $/t 100.00 95.00 +5.00 81.67 81.67 30.42 Min. Low Silver Lead Concentrate TCs CIF China $/t 80.00 75.00 +5.00 61.67 61.67 15.00 Annual benchmark high silver 98/0.6 TC/RC in 2019 Annual benchmark low silver 99 flat in 2019 MARKET COMMENTARY Lead Concentrate Indicators Spot Lead Concentrate Key Points High Silver Lead Concentrate TCs 130 Sept lead concentrates treatment charges (TC) on a CIF China basis rose further in Sept to its highest level since price launch in Jun 2017. TC for low silver lead concs is assessed at $80-100/t while those for high silver lead concs is at $100-120/t with Chinese major lead smelters cutting capacity in Henan province ahead of National day celebration to curb pollution. “There are only very few lead smelters buying concentrates right now. Less than a handful in China.”- a smelter source. Volcan, Black Mountain brands are being offered at slightly under $100/t while offers of Australian concentrates are ample on the spot market at three-digit levels. High Silver Lead min. estimate 110 90 High Silver Lead max. estimate 70 50 30 10 -10 Lead market participants were in Bali in early Sept for the annual battery conference reported a weaker outlook for physical demand of the battery making metal in the Asian market. The Indian lead premium is at record low level as of end of Sept on significant decline in automotive sales and production figures. Jun-19 Feb-19 Oct-18 Jun-18 Feb-18 Low Silver Lead Concentrate TCs 130 China’s refined lead production from Jan to Aug rose 18.8% yoy to 3.96 million tonnes, according to National Bureau of Statistics. Oct-17 Jun-17 Feb-17 -30 Nyrstar restarted an old sinter plant in Port Pirie in late Aug while the TSL furnace remains shut since early Aug with no time table of resumption available. The Port Pirie smelter produced 170kt of lead in 2017. 110 Low Silver Lead min. estimate 90 Low Silver Lead max. estimate 70 50 30 10 Lead Concentrate Tenders -10 Golden Grove - 10kt Q4 '19 - under offer Santa Luisa - 900t end of Sept - awarded $120/t CIF China Jun-19 Feb-19 Oct-18 Jun-18 Feb-18 Oct-17 Jun-17 Feb-17 -30 High silver: South32 agreed 2019 terms with smelters with smelter customers at rollover to 2018 levels - $98 TC and $0.6/oz RC. Context for annual TCs Summit/San Cristobal follow. Unchanged annual terms come as additional mined lead expected this year supply fails to materialize significantly. Spot market TCs still trading in double digits. Low silver: Teck said to agree Red Dog concentrates deal with smelters at level similar to 2018’s $99 per tonne TC. Zinc & Lead Concentrate coverage from: Archie Hunter London Julian Luk London archie.hunter@fastmarkets.com julian.luk@fastmarkets.com Anna Xu Shanghai anna.xu@fastmarkets.com
