Zinc output in China, the world's largest producer, may have rebounded last month as expansion by bigger producers more than offset supply reductions from smaller rivals, an executive said yesterday.

"We expect a pickup in zinc production from August," said Suo Fang, vice president of Yunnan Haolong Industrial Group Co, over the weekend.

Yunnan Haolong is among the largest zinc-mining companies in southwestern China's Yunnan Province.

The bigger smelters were stepping up output in expectation of improved demand in the autumn, she said.

Some of China's zinc and lead smelters, including Yunnan Haolong, agreed in July to cut output 10 percent to try to lift prices and ease a nationwide power shortage, according to Bloomberg News. China's zinc output fell 10 percent from June to 331,000 tons while production of lead dropped 5.6 percent to 289,000 tons, official data show.

"Despite a well-recognized surplus, new capacities keep coming on-stream in China," Fan Jianming, vice president of Western Mining Co, said in Shanghai on Saturday. China's zinc output for the full year was expected to reach 3.9 million tons, 3 percent more than in 2007, Fan said.

Western Mining, the country's fourth-largest producer of zinc concentrate, was fully utilizing its 60,000-ton zinc smelting capacity but had halted its 50,000-ton lead anode plant for cost-improving restructuring, Fan said. Mining operations were running as normal, he added.

Yunnan Haolong had halted production of low-grade ores and cut back on high-grade ores because falling prices made the low grades unprofitable and the high grades "a waste of resources," Suo said in Shanghai. "Many miners in the province are doing the same" which was causing relative tightness in the domestic concentrate market in the near term, she said.

Still, the company's output of zinc anode would rise about 13 percent in the second half to 45,000 tons, she said.

Three-month zinc futures, which have fallen 26 percent this year on the London Metal Exchange as demand lags supply, ended at US$1,750 a ton on Friday.

The lead contract has tumbled 29 percent and last traded at US$1,805 a ton.

(Shanghai Daily September 8, 2008)