Analysis of Secondary Lead Smelters' Production Suspension and Resumption During Chinese New Year [SMM Analysis]

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SMM, January 24:

As the Chinese New Year approaches, the shutdowns, holidays, and production resumption plans of China's secondary lead smelters have become the focus of market attention. It is understood that most smelters chose to shut down for maintenance or take holidays around the Chinese New Year in January to adapt to tight raw material supply and reduced lead ingot demand during the holiday period. This move led to a significant decline in secondary lead production in January, with an impact of 46,377 mt MoM, exerting some pressure on market supply.

Specifically, in January, multiple smelters in Anhui, Inner Mongolia, Shandong, Zhejiang, Jiangsu, and other regions arranged shutdowns for maintenance or holidays. Among them, Jiangsu G Company, which ceased production at the end of December, did not produce in January, with an impact of 14,000 mt, making it one of the most affected enterprises. Additionally, during the Chinese New Year, smelters in Jiangxi, Guizhou, Shanxi, Hunan, Ningxia, and other regions also generally opted for shutdowns and holidays, further reducing market supply.

However, with the end of the Chinese New Year holiday, production resumption is expected to emerge in February. According to SMM data, multiple smelters are expected to resume production in February, including Zhejiang A Company, Jiangsu B Company, Anhui D Company, and others. The resumption of these enterprises will bring new supply to the market. Notably, Jiangsu B Company and Anhui D Company plan to resume production of 8,000 mt and 10,000 mt, respectively, in February, which will have a positive impact on market supply.

Overall, although the shutdowns and holidays of secondary lead smelters in January had some impact on market supply, the gradual resumption of production in February is expected to restore market supply. This will not only help alleviate the tight supply situation but also have a positive effect on stabilizing lead prices. Market participants should closely monitor the progress of smelter production resumption to better grasp market dynamics.