SHANGHAI, July 19 (SMM) - A recent SMM survey of 35 major domestic lead producers (total capacity: 2.77 million mt) revealed the following insights:
1) Operating Rates Improve in June
Based on the SMM survey, operating rates at producers who completed unit maintenance have now returned to normal, helping the average operating rate improve to around 67% in June. SMM expects China’s output of primary lead to be around 220 kt in June. Although domestic lead prices plunged to RMB 13,500/mt after LME lead prices hit a yearly low in early June, domestic lead prices later rebounded to around RMB 15,000/mt, moving up with rising LME lead prices, and easing market pessimism to an extent. As a result, overall operating rates at major domestic lead producers improved in June, although lead prices in June were generally down from May levels.
2) Domestic Lead Producer Selling Interest Returns at RMB 15,000/mt Level
Currently, raw material prices and stocks are two major concerns affecting whether or not domestic lead producers move goods. As most lead producers are experiencing tight supply of raw materials as well as rising costs, domestic lead producers are holding prices firm at RMB 15,000/mt again, as domestic market prices are now approaching RMB 15,000/mt. Some producers with ample raw material supply from self-owned mines report their willingness to move goods even at slim profits.
3) Stable Supply of Long-Term Contracts
Currently, long-term contracts at domestic lead producers are stable, and some producers told SMM that inventories are low since long-term contracts account for the majority of sales, although operating rates are returning to normal.
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