SHANGHAI, Feb. 20 (SMM) – An SMM survey of 12 major domestic secondary lead smelters (total capacity: 1.685 million mt/yr) revealed the following insights:
According to an SMM survey of 12 major dometsic secondary lead smelters with total capacity of 1.685 million mt, the average operating rate at secondary lead smelters was only 27.81% in January.
China’s secondary lead industry is characterized by small scale facilities, scattered distribution, and lax regulation. In 2011, some secondary lead smelters were closed due to environmental protection inspections conducted at lead-acid battery manufacturers. In addition, VAT rebates were cancelled in early 2011, so the entire industry suffered as a result of environmental protections pressures and low profit margins. These measures may pose great challenges to the secondary lead industry, but may achieve a more centralized and sound secondary lead market. Although notices were issued in late 2011 describing the measures needed to restore VAT rebates, actual implementation is proving difficult given the rigorous application requirements. As a result, operating rates at secondary lead smelters were severely impacted by market conditions and policies.
Unlike the primary lead sector, many secondary lead smelters halted production during the Chinese New Year holiday and did not resume operation until after the Lantern Festival on Febuary 6th, leaving only 10 days available for production in January. Some smelters even suspended secondary lead production for the entire month of January and produced modest amounts of alloys instead. In addition, secondary lead smelters normally produce based on orders rather than maintaining a steady output. As a result, operating rates may vary widely. Since lead-acid battery producers closed for the holiday in January, secondary lead smelters cut production due to reduced demand for both alloys and refined lead.
With secondary lead smelters now gradually resuming production, operating rates at smelters will also continue to rise.