Mines in the Hunan province of China produced 414,000mt of zinc concentrate in the prior year, and were forecast to produce 521,000mt in 2020, before Covid-19 (coronavirus) struck the country.

 

Mines are unlikely to resume work before Feb 20, while some mines plan to only resume in March. Mines in Mongolia’s Dongshengmiao region are also closed on account of coronavirus outbreak. Mining operations in this region produced 90,000mt of zinc in 2019.

 

Chinese smelters have a concentrate inventory to ensure a 20-day production limit, at a minimum. If the impact the virus on supply chains extends beyond the end of February, smelters will have to cut output. Similarly, lead smelters in China are now also facing a shortage of lead concentrates and scrap battery raw materials due to logistics bottleneck.

 

China, a major consumer and producer of zinc has reduced imports of zinc concentrates which has created an oversupply globally. The oversupply will put an upward pressure on zinc prices. 

 

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