Amid market speculation and heightened scrutiny, South Korea’s Young Poong Corp has implemented a 20% reduction in production at its Seokpo zinc smelter, countering rumors suggesting a possible facility closure. The Seokpo smelter, boasting a capacity of 400,000 metric tons per year and ranked as the world’s sixth-largest, is a focal point for the zinc market, with potential significant production adjustments posing implications for the global zinc supply-demand balance.
Addressing concerns surrounding the facility’s operational status, a company spokesperson clarified that the Seokpo smelter is presently operating at around 80% of its capacity. The spokesperson assured that ongoing work stoppages are expected to be resolved promptly, dismissing baseless allegations and hearsay regarding a complete shutdown of the facility.
Recent operational challenges at the Seokpo smelter have led to a temporary reduction in production levels, with reports indicating a planned decrease to 50% capacity starting from March. The facility faced disruptions since December following a tragic incident resulting in the exposure of an individual to arsine gas, leading to operational pauses.
In response to regulatory actions, the South Korean authorities had previously mandated a two-month shutdown of the smelter in North Gyeongsang province in 2021 due to violations of environmental regulations. Young Poong has contested the shutdown order through legal channels, with the outcome pending as legal proceedings continue.
Amidst a backdrop of declining zinc prices, currently around $2,460 per metric ton, down 20% from the previous year, multiple zinc mines and smelters have suspended operations over the past year. The challenging pricing environment and treatment charges have prompted smelters to adopt flexible strategies to navigate market conditions.
Global construction slowdowns have contributed to weakened demand, resulting in elevated inventories at London Metal Exchange (LME)-approved warehouses. LME zinc stocks have surged to their highest levels in over three years, reflecting the broader market dynamics influencing zinc producers and traders worldwide.
Korea Zinc, a key player in the zinc and lead metal industry, has traditionally procured zinc concentrates for a consortium of smelters, including Seokpo, on an annual basis. The developments at the Seokpo zinc smelter underscore the intricate interplay between operational challenges, market conditions, and regulatory compliance shaping the future trajectory of the zinc market.