Greatest interests are shown in investment in Chinese lead and zinc mining industry last year, with the investment accumulating to a record high of 11.36bln yuan, 99.6% more than a year earlier. The investment enthusiasm reached a peak in Q1 2007, but cooled down in late Q3 and early Q4, following a steep fall of zinc prices on world market.

Major achievement for investment in Chinese mining industry in the past few years will be significant expansion in the capacity. During 2007-2010, there will be some mines being built up in China, most in Inner Mongolia.

Antaike estimates Chinese total production of zinc-in-concentrate will increase by 300,000 tonnes to 3.46mln tonnes in 2008 from 2007.

The latest statistics of Antaike indicates Chinese zinc production capacity increased much more quickly than expected in 2007 and the same trend will continue into 2008.

Based on the reports for all ongoing projects, we expect another increase of 520,000 tpy in zinc production capacity in China in 2008 and a further 410,000 tpy in 2009. According to the timetable published for construction of new projects, we found another 750,000 tpy increase in the capacity in 2010. On assumption that all these projects could be materialized, Chinese total zinc production capacity will expanded to 6.12mln tonnes till the end of 2010.

We expect the total production of zinc will amount to 4.06mln tonnes in China this year, 340,000 tonnes more than the same time last year.

We estimate a supply surplus of refined zinc in China in 2008 and refined zinc will be in net export. However, on appreciation of RMB and the current tariff on zinc, it is difficult to see remarkable increase in export. We expect a net export of around 100,000 tonnes for 2008. There will be opportunity for China to export zinc when the singular appreciation trend for RMB changes. So export might be on increase in H2 2008.

Based on data of expected production, import and export, plus an estimation of 320,000 tonnes of stocks till the end of this year, we put our forecast for the Chinese zinc consumption at 3.68mln tonnes for 2008, increasing by 9.6% compared to 2007.

It is forecast zinc prices will remain stable in 2008. Disruption in logistics and material supply shortage in some regions will restrict supplies sometimes. We expect zinc price will stay higher than 18,000 yuan/t prior to the Olympic and thereafter will follow the international market to move.

Executive Summary
Macroeconomic Outlook
Chinese Zinc Concentrate Supplies
　Investment in Chinese lead and zinc industry
　Mining projects
　TC of zinc concentrate
Chinese Refined Zinc Production
　Greenfield and Brownfield projects
　Zinc production
Import and Export of Zinc
　Import and export
　Zinc stocks
Consumption
Market Balance and Price Outlook

Tables

Table 1：Prosperous index of the macroeconomics
Table 2: Investment in Fixed Assets by Industry (2008.01-02)
Table 3: Chinese zinc mine’s expansion capacity for 2008
Table 4: Mine zinc production in China by provinces
Table 5: Supply and demand balance of zinc concentrate in China
Table 6: Import of zinc concentrate into China by origin
Table 7: Treatment charge for imported and home-made zinc concentrate
Table 8: Chinese additional zinc production capacity for 2008-2010
Table 9: Chinese zinc production capacity by region
Table 10: Chinese zinc production by province in 2006-2007
Table 11: Chinese zinc production capacity by province in 2005-2008
Table 12: Chinese zinc producer with capacity above 50kt in 2007
Table 13: Chinese zinc market balance in 2007-2008

Charts

Chart 1: Investment in lead and zinc mining and smelting industries in China
Chart 2: Zinc production capacity in China in 1998-2010
Chart 3: Chinese zinc production and the annual growth rate
Chart 4: Chinese zinc production on monthly basis
Chart 5: Chinese spot price and import and export price of zinc
Chart 6: Weekly Zinc Stocks at SHFE in 2008
Chart 7: Production, import and export of galvanized sheet in China
Chart 8: Apparent consumption and the annual growth rate of galvanized sheet in China in 2000-2007
Chart 9: Daily SHG zinc prices on Chinese spot market
Chart 10: SHFE mainstream contract price and LME 3-month contract price

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