SHANGHAI, Feb. 6 (SMM) –

Lead Concentrate
According to data from China Nonferrous Metals Industry Association (CNIA), China produced 253,000 mt of lead concentrate in December, a new monthly high of the year, and increased slightly by 9.2% from November.

Data released by the CNIA was not in line with SMM survey results. Although some mine operators increased production in order to meet annual targets, some dressing processes were suspended in North China due to the cold weather. In addition, mines in South China, although not greatly influenced by weather, had no incentive to increase production due to a lack of positive economic news and low lead concentrate prices caused by weak lead prices. As such, SMM believes the record high output in December and the 9.2% increase MoM reported by CNIA are overly optimistic. In addition, CNIA data showed Inner Mongolia produced the most lead concentrate in December at 76,100 mt, up by as much as 31.6% MoM, also not in line with SMM survey results, which revealed some mine operators in Inner Mongolia suspended some dressing processes in December due to cold weather. In addition, enterprises which had already met annual production plans closed in advance for the Chinese New Year holiday. In this context, despite increased production at some enterprises, lead concentrate output was not likely to be as high as CNIA reports.

Refined Lead
Data from the CNIA also showed China's refined lead output reached 434,400 mt in December 2011, up 6.13% MoM, and with output of primary lead increasing 3.9% MoM.

According to an SMM survey of operating rates at domestic primary lead smelters, the average operating rate at major domestic smelters was 60.33%, down slightly from November. This decline is mainly attributed to lower operating rates at medium-sized smelters with capacities between 50,000-100,000 mt/yr. Among medium smelters, Guiyang Yinxing Nonferrous Smelt Company was producing refined lead during December, but other enterprises began repairs in late November and reported no refined lead produced during December, lowering average output at smelters with capacities between 50,000-100,000 mt/yr.

Given low lead prices and the lack of upward price momentum, as well as increases in production to meet year-end targets, SMM expected refined lead output would remain stable in December, so the slight increase of refined lead output in December reported by CNIA was still in line with SMM's prediction.

Refined lead produced from the four regions of Henan, Hunan, Yunnan, and Guangxi accounted for 63.2% of China’s total output in December. Output in Henan grew significantly, up 39.58% MoM and mainly due to the resumption of production at Yuguang Gold & Lead Group and Wanyang Smeltery Group following repairs.