November 20, 2008

Chinese Zinc producers discuss output cuts

Bloomberg reported that Zinc smelters in China will meet to consider production cuts as falling prices cause losses.

The official who spoke earlier in the day to smelter executives who will attend the meeting that, producers including Sichuan Hongda Chemical Industry Co and Henan Yuguang Gold & Lead Co are meeting this weekend to discuss what other measures to take.

Executives said privately owned small to medium sized smelters are likely to reduce output as losses mount when prices fall below production costs.

Zinc rose by the exchange imposed daily limit in Shanghai on concern producers in China may follow a move by aluminum makers to cut output because of a power shortage in the country.

Analyst at Shenzhen Rongtuo Trading Co said, China's zinc producers may be meeting this weekend and the issues of power problems and possible production cuts may be discussed.

Zinc for September delivery on the Shanghai Futures Exchange, the most active contract, rose as much as CNY 605 or 4% from the previous settlement to CNY 15,805 per tonne the highest since July 3rd. The contract ended at CNY 15,655.