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SMM Pb Output Data Analysis in September
Nov 14,2011 14:12CST
smm insight
SMM believes refined lead output in September should remain stable or fall compared to August.

Refined Lead
According to data from the China Nonferrous Metals Industry Association (CNIA), China’s refined lead output in September was 406,700 mt, up 5.57% MoM. YTD output through September reached 3.37 million mt, up 14.11% YoY. These results show lead output in September increased both on a MoM and YoY basis. The data also showed refined lead output increased by 22,000 mt from the previous month, consisting of 8,000 mt of primary lead and 14,000 mt of secondary lead. However, according to an SMM survey of primary lead smelters, the average operating rate at primary lead smelters fell to new yearly low in September.
SMM conducted survey of 40 Chinese primary lead smelters of all sizes, with a total capacity of 3.7 million mt. According to the survey, the average operating rate at the 40 smelters was 56.31%, down 5.73% on a monthly basis and a new yearly low. Operating rates at all scale enterprises experienced significant declines in September, due mainly to a plunge in lead prices. Average lead prices fell nearly RMB 700/mt, far below production costs for smelters, and causing many to halt production or begin maintenance. Yuguang and Jiyuan Jinli were still in maintenance, while Hanzhong Zinc Industry Company, Shaanxi Nonferrous Metals Company, and Huludao Zinc Industry Company halted production. Low water levels in Yunnan and Guangxi also restricted production, leading to significant declines in primary lead output. Total refined lead output at surveyed enterprises fell 17,400 mt compared to August, but CNIA data showed refined lead output in Henan, Guangxi and Hunan, where primary lead production concentrated, increased by 11.2%, 14.4% and 4.3%, respectively, and with an increase in total primary lead output of 8,000 mt, and in conflict with SMM survey results.
According to CNIA data, secondary lead grew 14,000 mt in September and supposed to offset some of the decrease in primary lead output, but still short. In this context, SMM believes refined lead output in September should remain stable or fall compared to August, but a monthly increase of 5.57% is not likely.

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