China announces massive reduction in zinc smelting capacity

The latest report released by the Shanghai Metal Exchange suggests that the country could eliminate nearly 500,000 tons of zinc smelting capacity during this year. The move is seen as part of the government's efforts to cut production capacity and inventory. The Chinese government has announced a series of structural reforms to limit the oversupply of zinc and reduce the cost of producing the metal.

According to the China Nonferrous Metallurgy Association, close monitoring of the country's smelting potential is necessary to prevent overcapacity. The industry needs to put in place strict cost controls to compete with other producing countries. The authorities have increased the tax burden, thereby lowering the profits of companies. Many factories are unprofitable. The Association urged companies in the metals sector to take the necessary steps to reduce operating costs in smelting operations.

Meanwhile, a report on the zinc sector recently released by the state-owned metallurgical consultancy Beijing Antaike predicts an expansion of the country's refined zinc surplus in 2016 from the previous year. The excess zinc is expected to rise from 451,000 tonnes in 2015 to 670,000 tonnes this year, according to Antaike's report. Zinc consumption is expected to increase slightly from 6.28 million tonnes in 2015 to 6.3 million tonnes in 2016. In addition, zinc production in the country will grow by 3 percent compared to 2015 to 6.4 million tons this year.