Zinc output in China, the world's largest producer, may drop by 60,000 tons this year because of smelter damage from the May 12 earthquake, Beijing Antaike Information Development Co said.

Production losses may not be made up later in the year because of the damage at some smelters, Feng Juncong, Antaike's chief zinc analyst, said in a phone interview with Bloomberg News from Beijing yesterday. The researcher's forecast for Chinese output this year before the quake was 4.06 million tons, up from 3.71 million last year.

Sichuan Hongda Chemical Industry Co and some other smelters halted production after China's strongest earthquake in 58 years killed at least 40,075 people, buried buildings, damaged factories and power infrastructure. Prices of zinc, used to galvanize steel, are up 4.2 percent since May 9, the last trading day before the quake.

"The loss may ease global supply pressure for the metal which is in surplus and curb further declines," said Feng.

The metal will have a surplus of 215,000 metric tons this year after global production expanded, the International Lead and Zinc Study Group said on April 24.

Feng based her estimate on the assumption that Sichuan Hongda's 100,000-ton capacity would remain closed for at least three months, and the rest of the halted 350,000-ton capacity would stay shut for a month to a month and a half.

Macquarie Group Ltd estimates that zinc losses from the China quake will be 20,000 tons to 30,000 tons, equal to less than 1 percent of Chinese output as a whole.

"We estimate that around 300,000 tons per annum of zinc smelting capacity has been affected by the crisis, which may force the suspension of operations for 7-15 days or more," said the bank in a note dated Monday.

"This minor cut in supply is unlikely to significantly reduce the surplus that we are forecasting" for 2008, the bank said.

(Shanghai Daily May 21, 2008)