China quake seen cutting metals output, lifting zinc prices

Now here’s an aspect of the China quake scenario I’ll bet you hadn’t considered …

Heightened concerns that China’s devastating earthquake will curtail the country’s massive metals output helped aluminum, zinc and other base metals extend a two-day rally Friday.

China is the world’s largest producer of zinc, aluminum and lead.

Only a sliver of the country’s base metals mining and production takes place in Sichuan province, the epicenter of Monday’s 7.9-magnitude earthquake, which Chinese authorities now estimate has claimed more than 21,500 lives. But the two nearby provinces also jolted by the quake — Shaanxi and Gansu — have mines and smelters as well.

Bloomberg wrote:

Zinc rose in London, heading for the biggest weekly gain since February, as the biggest earthquake in nearly six decades in China hit output in the world’s biggest producer. Aluminum also climbed.

China’s 7.9-magnitude earthquake is affecting as much as 350,000 tons of zinc smelting capacity in Sichuan and neighboring provinces, according to Beijing Antaike Information Development Co. The tremor that took place May 12 also affected transportation and power supplies.

At the same time, other analysts are saying that China will temporarily stop buying some metals, because they are distracted by bigger domestic issues at the moment.

However, logic would indicate that, if there is rebuilding to be done afterwards, they will need more, not fewer, resources.

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