Company News

UPDATE 1-China smelter Yuguang slashes zinc output in half amid virus outbreak

* Henan-based Yuguang shuts half of 300,000 tpy zinc capacity

* Move comes amid high inventories of byproduct sulphuric acid

* Company’s lead, copper production so far unaffected (Adds background, zinc price)

BEIJING, Feb 13 (Reuters) - Henan Yuguang Gold and Lead , one of China’s biggest lead and zinc producers, has cut zinc output by 50% amid the coronavirus outbreak in the country, a company executive said on Thursday.

Yuguang on Wednesday closed half of its 300,000 tonnes per year zinc smelting capacity, mostly because the company is unable to shift high inventories of byproduct sulphuric acid, sales director Li Xiaodong said.

Shrinking demand for zinc, used to galvanise steel, was another factor behind the move, said Li, who added that Yuguang’s lead and copper production was still “holding up.”

He said they was no need for the smelter to declare force majeure on its supply contracts. Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control.

Yuguang is based in central China’s Henan province, which borders virus epicentre Hubei to the north. It has annual smelting capacity of 400,000 tonnes of lead and 150,000 tonnes of copper in the city of Jiyuan.

Smelters in China, the world’s top metals consumer, have been unable to sell off their high sulphuric acid inventories due to transport curbs imposed to contain the spread of the virus. Widespread factory closures have also reduced demand for sulphuric acid.

Prices for zinc were up 0.5% on the London Metal Exchange at $2,158 a tonne as of 0652 GMT but are down 5% so far in 2020 on concerns the virus will sharply reduce economic growth and hurt demand for industrial metals. (Reporting by Tom Daly; Editing by Kim Coghill)