The terms being offered by smelters in Asia to suppliers of concentrate in Australia reflect the "paltry" conditions in the spot market., one trader said. An overwhelming majority of zinc concentrates from Australia have been sold under long-term contracts, leaving little available for spot sales, traders said.

Chinese smelters in particular, facing prospects of domestic mines shutting down for at least two weeks over the Chinese New Year period are expected to bear the brunt of the shortfall.

"Because of the Financial situation in China, insufficient amounts of foreign material were secured in the third quarter of 1998 to compensate for the mine closures," a trader with close ties to China's zinc smelting industry said.

"This could lead to some cutbacks early next year," thesource added.Australia in 1998/99 (July/June) is forecast to export around 1.55 million tonnes of zinc ore and concentrate, up from 1.45 million tonnes in the previo year, Australian Bureau of Agricultural and Resource Economics show."There's a lot of concentrate coming from Australia, the problem is it's mostly sold long-term," said the zinc smelting source.

Early rounds of "mating season" negotiations have commenced between mining and smelting companies to hammer out long-term charges for next year. Both sides will be looking to improve on last year's terms of around $187.50/tonne, basis $1,100.

However, it is unlikely the talks will be finalised before January, several dealers said.

Production from the Century mine in Australia, forecast to yield about 800,000 tonnes a year after commissioning in late 1999, is unlikely to impact the spot market in the future as all but a fraction of the output has been sold long term, the mine's owner, Pasminco Ltd has said. The majority of the concentrate isearmarked for Pasminco's Risdon smelter in Tasmania and Budel smelter in the Netherlands.