Chinese Zinc Smelters to Meet Following Cuts in Output

China's large zinc smelters plan to meet on Tuesday in Beijing, an industry association executive said on Monday, after small smelters agreed over the weekend to cut their output by 10% to lift local prices.

The meeting, organised by the lead and zinc division of the China Nonferrous Metals Industry Association, will discuss market conditions, but the smelters had no specific plan to discuss output cuts, the division's director Zhao Cuiqing said.

"The association called for the meeting, and we also invited some government bodies and industry associations of downstream industries such as the China Iron and Steel Association," Zhao said.

Major Chinese zinc smelters such as Zhuzhou Smelter Group Ltd, a subsidiary of Hunan Nonferrous Metals Corp, Huludao Zinc Industry and Shaoguan smelter of Shenzhen Zhongjin Lingnan Nonfemet will attend the meeting.

China's small- and medium-sized zinc smelters, accounting for about 30% to 40% of output in the world's top producer of the metal, agreed on Saturday to cut production immediately by 10%, industry sources said.

"It is a good thing. It gives a lesson to our association's work," Zhao said.

Small smelters, including Henan Yuguang Gold and Lead Co Ltd and Sichuan Hongda Co Ltd, agreed to cut output and also called on the government to establish a strategic reserve of the metal in order to help stabilise prices, as it does for other commodities like copper and wheat.

The deal comes just two days after China's biggest aluminium smelters agreed to cut output by 5%-10% to ease escalating electricity shortages that threaten to push the country into its worst summer power crisis since 2004.

China produces about a third of the world's refined zinc, a metal used mainly to galvanize steel.

Zinc is less energy-intensive to produce and a much smaller industry than aluminium, but it faces similar power supply problems as Chinese generators curb electricity production due to soaring prices and low supplies of coal, their primary fuel.

By Alfred Cang, Reuters