SMM Pb Survey: Average Operating Rate at Primary Lead Smelters Up in March

SHANGHAI, Apr. 16 (SMM) –An SMM survey of 43 domestic major primary lead smelters (total capacity: 4.045 million mt/yr) revealed the following insights:

1) Average Operating Rate at Primary Lead Smelters Up Steadily in March
According an SMM survey, the average operating rate at domestic major primary lead smelters during March was up 6.55% MoM, to 58.97%, while refined lead output at the surveyed smelters was 202,600 mt, rising 22,500 mt from a month ago.

Operating rates at both large enterprises and SMEs improved by varying degrees during March. Average operating rate at large smelters with capacities above 100,000 mt/yr exceeded 80% during March, rising as high as 80.58%, which was the highest average rate since May 2011. Some enterprises which had not fully resumed operations during February were able to reach full production during March, helping raise average operating rates.

The average operating rate at medium smelters with capacities between 50,000-100,000 mt/yr also moved higher. Enterprises previously under repair, such as Liaoning Chengxin Group, Jiangxi Jinde Lead Stock, Luoyang Yongning Gold & Lead Smelt, and Shadian Hexing Lead Industry, all recovered during March and added output from the previous month. Chengyuan Smelter and Hechi Nanfang Nonferrous Metals were also reported to have restarted production in late March as well. As a result, the average operating rate at medium smelters rose sharply to 46.09%, up 8.24% from February.

Smaller smelters in the Gejiu region of Yunnan province with capacities below 50,000 mt/yr reported relatively slow growth in operating rates since the region was still affected by water shortages and power restrictions. However, the influence was limited and due to the supporting policies to major enterprises, leaving overall operating rates up slightly.

2) LME Lead Prices Hover at Low Levels, Lead Concentrate Imports Turn Brisk
In response to a slowing Chinese economy and negative expectations for the European economic outlook, LME lead prices fell from USD 2,100/mt to USD 2,000/mt in late March. China’s domestic smelters became more enthusiastic toward importing lead concentrate in March due to tight domestic supply and a favorable Shanghai/LME lead price ratio.

The first quarter is traditionally a period of low domestic output of lead concentrate since output at mines in North China is low due to cold weather, leading to insufficient supply in China’s domestic markets and causing many domestic enterprises to turn to imports of lead concentrate. In addition, LME lead prices have fallen sharply in March to as low as USD 1,960/mt and continue to hover around the USD 2,000/mt mark, keeping the Shanghai/LME lead price ratio above 7.5 and causing lead concentrate imports to turn brisk.