Some progress has been made in the negotiation of treatment charges (TCs) for this year's annual zinc concentrate supply contracts. Teck Cominco is said to have secured a TC of 140-141 dollars/t basis 1,000 dollars/t for supplies of Red Dog's zinc concentrate to Korea Zinc. This represents a cut in the headline TC of 7 dollars/t from their business in 2003. However, it is suggested that Korea Zinc may have conceded to an increased silver payment. Silver payments were typically 60 percent of the concentrates silver grade over 140 g/t in 2003. On the other hand, price participation may have moved a little in the favour of smelters (in principle). Although the deescalator is thought to be unchanged on last year at 14 15 percent, the escalator is thought to have increased from 16 percent to as high as perhaps 18 percent. Smelters would have to be bullish on zinc's price prospects to consider this as good consolation. Certainly, the LME cash price had been trading around 1,100 dollars/t during March but has fallen by almost 100 dollars/t since the end of last week. In any case, smelter revenues denominated in South Korean won will have raced higher in the first quarter of this year despite this cut in TC, for zinc prices have been strong. Japanese smelters will have been far less fortunate, especially if this deal is reciprocated with them, for the yen has been much stronger against the US dollar (see chart).
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