Recently, protests in Peru have continued to intensify, and transportation of some roads has been blocked. Nexa Resources SA has stopped production in the Atacocha San Gerardo open-pit zinc mine in Peru.
In the short term, Peru's zinc ore supply has little impact on the current global zinc ore surplus supply and zinc price. The main reason is that the overseas zinc smelters have not resumed or increased production and the demand for zinc ore is not large, while China's domestic zinc ore supply is surplus. Therefore, there will be no shortage of zinc ore supply in a short time.
In the long term, if Peru continues to stop exporting zinc ore when overseas zinc smelters resume production and consume excess zinc ore inventory, plus China's domestic zinc smelters continue to be at full capacity, there may be a shortage of zinc ore supply in the second half of 2023.
According to the United States Geological Survey (USGS) statistics, Peru's zinc ore reserves were 19 million tonnes in 2021, accounting for 7.6% of the global reserves and equaling to 43.18% of China's.
Data Source: USGS
The output of Peru's zinc ore reached 1.6 million tonnes in 2021, accounting for 12.31% of the global output. The output of Peru's zinc ore had a growing trend, and its proportion in the global output remained at about 10%.
Therefore, Peru's zinc ore reserves and production have an important position in the world.
Data Source: USGS
According to the General Administration of China's Customs (GACC), the quantity of zinc ore from Peru to China in 2022 was down by 14.81% year on year to 669,700 tonnes, accounting for 16.2% of China's imported zinc ore in 2022. The proportion of the amount of zinc ore from Peru to China in the amount of China's imported zinc ore tended to maintain at more than 15% from 2011 to 2022. Peru's zinc ore played an important role in China's imported ore.
Data Source: GACC
Affected by the energy crisis and other events, the overseas natural gas price rose in 2022, resulting in many overseas zinc smelters having to reduce or stop production due to high costs, then the demand for overseas zinc ore fell. However, due to the high price of zinc, the profits of zinc mines rose in the first half of 2022, prompting global zinc mine enterprises at full capacity. As a result, the global zinc ore supply has changed from shortage to surplus since the second half of 2022.
The inventory of zinc concentrate in China's ports was 395,000 tonnes, and inventory days of zinc concentrate in China's smelters was 43 on January 27, 2023, both of which were at historically high levels, according to Mysteel's data.
Data Source: Mysteel
Data Source: Mysteel
Written by Durand Du, duxiaoyu@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com