SHANGHAI Jul. 18 (CBI China)--Supply of electricity has been tightening since last week in some areas of Henan province, but especially in Jiyuan and Lingbao city, where four lead smelters, each capacity of more than 100kt/yr, are located. The four smelters include Henan YuGuang Gold & Lead Group, the largest lead smelter in China. Not included in the four was Lingbao Xinhua Lead Industry's 100kt/yr lead unit, which was still in trial runs. Total refined lead capacity of the four lead smelters is 710kt/yr.
Faced with power shortages, those smelters were forced to reduce output of #1 lead by 30%-50%, while output of crude lead remains normal. The cuts indicate supply of #1 lead will tighten in the short term, but output will return to normal when power levels are resumed. In addition, cuts in output at Henan YuGuang Gold & Lead Group were also blamed on technical malfunctions at the facility. In this context, supply of lead in domestic spot markets was tightening, and the incremental purchases from traders and downstream producers exerted further pressures on market supply. Production losses are unknown at this time, but if the existing power supply shortages continue into late August, production losses of refined lead in Henan province will be around 10 kt.
Henan province is the largest producer of lead in China, accounting for 1/3 of China's output. Lead capacity in Jiyuan and Lingbao city accounts for more than 60% of Henan's total output.
In Henan province, only YuGuang Gold & Lead Group has a zinc capacity of 100kt/yr, and production has not yet been affected.