China's Gejiu Area Lead Smelters Face Closure - Industry-Shanghai Metals Market

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China's Gejiu Area Lead Smelters Face Closure - Industry

Industry News 02:57:29PM Jun 03, 2010 Source:SMM

HONG KONG, June 3 (Reuters) - Ten percent of production capacity in China's main lead centre may shut this year as part of an environmental clean-up by Beijing that comes as smelter firms grapple with water scarcity and lower processing fees.

An estimated 50,000 tonnes of capacity is expected to be closed in 2010 among 53 lead smelters in the Shadian industrial section of Gejiu city in Yunnan province which has 500,000 tonnes of lead smelting capacity a year, local officials said Thursday.

"The government wants to phase out some capacity and we have started here," said Ma Xingkang, a smelter owner and chairman of the Shadian Nonferrous Metals Association.

It is unclear if the 50,000 tonne closure estimate by Ma is part of Beijing's aim to shut 243,000 tonnes of lead capacity nationwide this year. Separately, China has a three-year project to close 600,000 tonnes of lead and zinc capacity that started last year. 

"There would be more closures next year and the year after in Gejiu," Ma said, referring to the Beijing plan to require existing lead smelters to upgrade technology and reduce emissions by the end of 2010. The push to shut some units comes as more than half of the smelting capacity in Gejiu has closed temporarily since the first quarter of the year because of a water shortage linked to drought.

China's lead production dropped 2.5 percent from a year earlier to 309,000 tonnes in April.

NEW SMELTERS

At the same time, plans to build two 100,000 tonne-a-year environmental friendly smelters in Gejiu for completion by 2012 have been approved, said a manager at Shadian Smeltery, which will build one of the new smelters.

"Smelter operators here are uncertain what everything will look like in two to three years," the manager said.

Currently, water remains a major problem for lead smelters in Gejiu since rains expected this June have not arrived yet. Some smelters truck in water from outside the area for the production, Ma said, adding he expects full production to soon resume.

Some operating smelters have increased bookings of spot lead concentrate imports in the past two weeks due to lower overseas prices than domestic concentrate prices, smelter officials and traders said.

Lead concentrate shipments to China are priced on the London Metal Exchange MPB3, which has fallen more than 15 percent since the beginning of May, along with declines in base metals, to $1,710 per tonne on Thursday.

"Many Chinese smelters have increased buying of spot imports in past two weeks from the previous few months. In theory, that could raise lead production starting in June," a trader at a large lead smelter in Henan province said of lead concentrates.

Traders said any imports booked in the past two weeks would arrive at Chinese ports in June and July and that import rush has pushed down spot treatment fees to Chinese smelters for processing material, now offered at $60-$70 per tonne versus $110-$130 in March.
 

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China's Gejiu Area Lead Smelters Face Closure - Industry

Industry News 02:57:29PM Jun 03, 2010 Source:SMM

HONG KONG, June 3 (Reuters) - Ten percent of production capacity in China's main lead centre may shut this year as part of an environmental clean-up by Beijing that comes as smelter firms grapple with water scarcity and lower processing fees.

An estimated 50,000 tonnes of capacity is expected to be closed in 2010 among 53 lead smelters in the Shadian industrial section of Gejiu city in Yunnan province which has 500,000 tonnes of lead smelting capacity a year, local officials said Thursday.

"The government wants to phase out some capacity and we have started here," said Ma Xingkang, a smelter owner and chairman of the Shadian Nonferrous Metals Association.

It is unclear if the 50,000 tonne closure estimate by Ma is part of Beijing's aim to shut 243,000 tonnes of lead capacity nationwide this year. Separately, China has a three-year project to close 600,000 tonnes of lead and zinc capacity that started last year. 

"There would be more closures next year and the year after in Gejiu," Ma said, referring to the Beijing plan to require existing lead smelters to upgrade technology and reduce emissions by the end of 2010. The push to shut some units comes as more than half of the smelting capacity in Gejiu has closed temporarily since the first quarter of the year because of a water shortage linked to drought.

China's lead production dropped 2.5 percent from a year earlier to 309,000 tonnes in April.

NEW SMELTERS

At the same time, plans to build two 100,000 tonne-a-year environmental friendly smelters in Gejiu for completion by 2012 have been approved, said a manager at Shadian Smeltery, which will build one of the new smelters.

"Smelter operators here are uncertain what everything will look like in two to three years," the manager said.

Currently, water remains a major problem for lead smelters in Gejiu since rains expected this June have not arrived yet. Some smelters truck in water from outside the area for the production, Ma said, adding he expects full production to soon resume.

Some operating smelters have increased bookings of spot lead concentrate imports in the past two weeks due to lower overseas prices than domestic concentrate prices, smelter officials and traders said.

Lead concentrate shipments to China are priced on the London Metal Exchange MPB3, which has fallen more than 15 percent since the beginning of May, along with declines in base metals, to $1,710 per tonne on Thursday.

"Many Chinese smelters have increased buying of spot imports in past two weeks from the previous few months. In theory, that could raise lead production starting in June," a trader at a large lead smelter in Henan province said of lead concentrates.

Traders said any imports booked in the past two weeks would arrive at Chinese ports in June and July and that import rush has pushed down spot treatment fees to Chinese smelters for processing material, now offered at $60-$70 per tonne versus $110-$130 in March.