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Chinese earthquake to disrupt base metals output

With China being the major producer of lead, zinc and aluminium, it is expected that the production of such metals will be disrupted due to the recent earthquake in China.

The 2008 Sichuan earthquake occurred on 12 May 2008, with its epicenter in Wenchuan County, Sichuan province of the People’s Republic of China. Zinc smelters in China have halted production after an earthquake in Sichuan, adding that up to 500.000 tonne of capacity could have been affected. It is estimated that nearly 400.000-500.000 tonne of zinc smelting capacity has been closed, according to latest report released on base metals by Karvy Comtrade Ltd.

Zinc smelters in Sichuan province, accounted for 5.5% of the total Chinese output last year. The affected capacity in Sichuan and neighbouring Shaanxi and Gansu provinces would be around about 11% of China’s total zinc smelting capacity. China may have halted 100.000 metric tonne of lead concentrate output in Sichuan and its neighbouring provinces. Damaged facilities and disrupted power supplies are expected to affect aluminium smelters in earthquake-hit areas of Sichuan Province.

“Any further news of production halt or supply disruptions may drag the metals prices higher especially for zinc, lead and aluminium. However, a huge rally is not expected as all the stated metals are expected to be in surplus this year. The higher prices will be for the shorter term and may not be sustainable for the longer period,” Ashok Mittal, vice-president, Karvy Comtrade told FE.

On May 13, 2008 the prices of LME Zinc rose by more than 6% to $2320 per tonne and LME lead increased by 3.12% to $2315 per tonne.

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