A recent SMM survey of 40 major domestic primary lead smelters in October (total capacities: 3.64 million mt) revealed the following insights:

October Operating Rates Down to Yearly Low of 56.01%
According to survey results, total output at major primary lead smelters reached 169,900 mt in October, and with the average operating rate falling to a yearly low of 56.01%, down 0.3% MoM. The major reason for the decline in rates is low lead prices. The average SMM price for #1 lead ingot fell further in October to RMB 14,835/mt, down RMB 800/mt MoM, discouraging primary lead smelters and resulting in lower operating rates.

The survey also revealed the decline in operating rates was mainly found at medium-sized enterprises with capacities between 50,000-100,000 mt/yr. Operating rate at these enterprises was only 47.84%, down 2.4% MoM, while operating rates at larger and smaller enterprises had recovered from last month. Output at large primary lead smelters was relatively stable, with sales mostly in the form of long-term contracts. Despite production cuts and unit maintenance of crude smelting at some smelters due to low lead prices, these producers were still buying crude lead from other enterprises to ensure lead output for long-term contracts. Meanwhile, Jiyuan Jinli completed repairs in mid-October and was able to contribute to total output.

Refined lead output was down at medium enterprises with capacities between 50,000 mt to 100,000 mt/yr for two major reasons. First, some enterprises such as Hanzhong Zinc Industry Company and Huludao Zinc Industry Company produce both lead and zinc, but with larger zinc output. These enterprises halted lead production to ensure zinc output. Second, other smelters were affected by power restrictions caused by water shortages in Yunnan province, particularly in the Gejiu area of Yunnan province.