SMM Pb Survey: Operating Rates at Lead Smelters Up Slightly

SHANGHAI, Sep. 13 (SMM) - A recent SMM survey of 35 primary lead producers (capacity: 2.77 million mt) revealed the following insights: 
 
1) Operating Rates at Lead Smelters Up Slightly
According to the SMM survey, the average operating rate at the 35 surveyed primary lead smelters (total capacity: 2.77 million mt) was 73.70% in August, up slightly from July’s level of 72.87%.  Among all producers, only medium-size smelters with capacities of 50-100kt/yr showed higher operating rates on a monthly basis, given existing tight raw material supplies and the growing number of smelters in maintenance during August.  Many smaller lead producers are located in Gejiu, Yunnan province, and a serious drought in that region has increased water prices, adding to local production costs.  According to the local industrial association, approximately 1/3 of more than 40 local lead smelters halted production due to higher production costs caused by water shortages and tight raw material supplies.

2) Raw Material Supply Dependent on Smelter Scale
Generally speaking, primary lead smelters have been reflecting difficulties in purchasing ores, with supply tightness of lead concentrate. Based on the recent SMM survey, large-scale smelters with self-owned mines have amply supply of raw materials, with inventories enough for 3-5 months’ consumption, such as Yunnan Chihong Zinc & Germanium Company and Shenzhen Zhongjin Lingnan Nonfemet Company.  However, lead smelters with no self-owned mines, including smelters who still need to outsource goods despite of having self-owned mines only have raw material inventories enough for 7-30 days’ consumption, lower than the normal inventory reserve period of 45-60 days. The number of lead producers with self-owned mines and amply supply is limited.  Hence, SMM believes that supply of domestic lead concentrate will remain tight for the foreseeable future.  

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