SMM Pb Output Data Analysis in March

SHANGHAI, Apr. 28 (SMM) –

Lead Concentrate
According to the China Nonferrous Metals Industry Association (CNIA), China’s domestic lead concentrate output during March was 265,600 mt, up 34.91% MoM. 1Q output was 610,000 mt, up 35.04% YoY.

China’s output growth of lead concentrate exceeded 30% both on a MoM and YoY basis during March. Since LME lead prices hovered around USD 2,100/mt from January to mid-March and unfavorable for importing lead concentrate, tight lead concentrate supply in North China promoted demand for domestic lead concentrate and boosted production at domestic mines. However lead prices remained in the RMB 15,500-16,000/mt range and TC for domestic lead concentrate remained relatively unchanged, keeping lead concentrate prices low. As a result, falling profits limited production at domestic mines and prevented mines in North China from fully recovering until March.

Lead concentrate output in Inner Mongolia during March was up 158% MoM to nearly 80,000 mt. Production at some mines in Guangxi were negatively influenced by cadmium pollution incidents, while dressing processes at mines in Yunnan province were constrained by drought conditions. However, data showed output in Guangxi actually doubled during March and output in Yunnan province also rose in excess of 30% MoM.

SMM believes lead concentrate supply will continue to increase since the weather is turning warmer and mines in North China are resuming full operations. However, most mines remain cautious toward output while maintaining steady sales given that lead prices have remained low since last year. In this context, production at mines will still be restricted, allowing only moderate growth in lead concentrate output.

Refined Lead
According to data from CNIA, China’s refined lead output during March was 329,000 mt, up 6.56% MoM, but down 12.9% YoY. 1Q output totaled 896,000 mt, down 16% YoY.

China produced 250,700 mt of primary lead during March, up 10.18% YoY. According to an SMM survey of operating rates at major primary lead smelters during March, Haicheng Chengxin Non-ferrous Metal, Jinde Lead Industry, Shadian Hexing Lead, and Luoyang Yongning Gold & Lead all completed repairs and have ramped up production, with output increasing from February levels. In late March, Chengyuan Mining & Smelting and Nanfang Nonferrous Metals Smelting were also reported to have resumed production, so operating rates at smelters with capacities between 50,000-100,000 mt/yr were up sharply during March. Refined lead output in Henan, Hunan, and Yunnan provinces also showed steady growth.

Output in China during March of other types of refined lead, mainly secondary lead, fell by 3.5%, to 78,500 mt, and only accounted for only 24% of total refined lead output. Most secondary lead smelters, including larger ones, were still subject to environmental protection inspections during March for which smelters suspended production by up to one week. Output in Anhui province, a major production base for secondary lead, fell by nearly 40%. With environmental protection inspections now focusing on the secondary lead industry, secondary lead output during 1Q slumped by 34.7% from the previous quarter, to 225,000 mt.