off to a point where right now there ’ s only about 50-60,000 tons of refined metal on the LME stockpiles .”
Alongside this demand thematic , more mine supply than smelting capacity has led to the current record high treatment charges . “ It ’ s an interesting confluence of events ,” observes Harris . “ With the smelting capacity in China now turning back on , those charges will start to drop . Those record high treatment charges have meant , combined with a relatively low zinc price , that mining companies take home has been squeezed dramatically from historic average . What you then see happen is quite a lot of marginal supply from mining concentrate suppliers has been turning off . We believe we ’ re about to see a major turnaround in this balance , as smelters work their way through the build up in concentrate supply , and all the additional smelting capacity comes back on . You can see it in the numbers , the month on month Chinese refined metal outputs are growing substantially , as those smelters are coming back online .
This restarting of capacity will result in a drawdown on the current concentrate build up , which will then require a supply response , however we are seeing that there ’ s not actually the additional mine supply available to feed into this drawdown . The other key factor you need to see to drive a step change in the zinc price , is for global sentiment around the trade disputes to settle . If one or both of these occur , we anticipate a substantial increase in the zinc macro environment ”
Harris believes that when the US and China come to an agreement , demand will take off again for industrial metal . “ We ’ ll see a huge demand for copper and associated base metals do to expected increased economic activity ,” he says . “ Zinc prices will rise and Century will be well-placed to meet the demand for supply , thanks to the investment we ’ ve made in expanding our facilities which will increase our output while lowering our operational costs to make our business more resilient through any price cycle and ready to take advantage of higher pricing .”
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