Japan Zinc Smelters Get Higher Treatment Charge

Japanese zinc smelters concluded the price negotiation with offshore miners at US$ 300 per tonne of treatment charge based on US$ 3,500 per tonne of zinc ingot price for calendar year 2007 compared with US$ 128 TC based on US$ 1,400 per tonne in 2006, which represents US$ 422 TC based on US$ 3,500 per tonne of ingot price. The new TC decreases by US$ 122 or 28.9% from previous year. However, Japanese smelters succeeded to keep price participation system despite of the termination request by miners. Zinc ingot demand increases for galvanizing steel while zinc ore supply is getting tighter after delayed new resource development under lower price. Under the market smelters are in tough time to purchase ore. However, zinc smelters could get higher revenue depending on the zinc ingot price due to higher TC in 2007 compared with record low TC in 2006 under tight ore supply. The smelters got more than US$ 400 per tonne of treatment charge including price participation gain when zinc ingot price was averaged US$ 3,275 per tonne at London Metal Exchange in 2006, which was more than double of base price of US$ 1,400.Copper smelting price participation system is to allocate 90% for miners and 10% for smelters out of gap between base price and actual market price. Zinc smelters get higher percentage of the gap than copper smelters depending on negotiated rate. Zinc smelters could get more than copper smelters under higher market price while zinc smelters could lose wider than copper smelters under lower price.