SHANGHAI, June 1 (SMM) -- A recent SMM survey of 35 major domestic lead producers (total capacity: 2.77 million mt/yr) revealed the following insights:
1) Operating Rates Continue to Fall
Based on the survey, the average operating rate at the 35 domestic lead producers was 60.91% in May, down from 63.60% in April, and with primary lead output expected to be 198 kt. The lower operating rates were due in large part to prolonged maintenance, extended from April to May. In addition, some domesic lead producers advanced unit maintenance given recent volatility of lead prices. Output in May fell by different degree, especially at producers with capacity of above 100 kt/yr, since these producers are more affected by high costs for imported lead concentrate and are also now suffering from existing sluggish domestic lead prices.
2) Pessimistic Outlook in Short Term, Mixed Interest in Selling Goods
Domestic lead producers remain pessimistic towards short-term prices given current market conditions. In this context, lead producers are not able to maintain prices at RMB 15,000/mt, but are giving off mixed signals with regard to sales. Some producers, with ample cash flow are holding goods since their supply is already down due to unit maintenance, and are able to keep prices firm between RMB 14,650-14,800/mt. However, other producers are selling goods to generate cash flow, regardless of prices.
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