SHANGHAI, Oct. 23 (SMM) – SMM’s survey of 12 major domestic secondary lead smelters revealed the average operating rate during September rose 6.6% MoM to 65.13%. The average operating rate at large smelters increased 14.46% to 87.71%, while the average rate at smaller smelters was up 11.46% MoM to 51.81%.
Three reasons are behind the rise in operating rates. First, secondary lead prices were buoyed by rising lead prices. SMM data showed the average price during September for secondary lead (Pb ≥ 98.5) was RMB 14,780/mt, up nearly RMB 180/mt from the average RMB 14,604/mt in August. The average price for secondary lead (Pb ≥ 99.97) was also up by RMB 207 MoM, and these price increases of secondary lead helped push up operating rates at smelters.
Second, the price gap between secondary lead (Pb ≥ 99.97) and #1 lead widened, boosting demand for secondary lead (Pb ≥ 99.97). Since #1 lead could now be replaced by secondary lead for lead-acid battery production, battery producers were more apt to purchase lower priced lead. The price gap between secondary lead (Pb ≥ 99.97) and #1 lead during August was as low as RMB 150/mt, but grew to RMB 450/mt in September, boosting demand for secondary lead.
Third, secondary lead smelters were optimistic toward the market outlook since winter is a traditional peak demand season for lead-acid batteries, which boosts demand for secondary lead and lead alloy. As a result, many secondary lead smelters begin building stocks before winter. As an example, sources at Anhui Huaxin Lead reported that their peak production period for secondary lead is usually between July and November.
Unlike large and small smelters, medium-sized smelters reported a slight decrease in operating rates during September, from 45.4% to 43.8%. Despite the commissioning of a new production line at Xin’an Huacheng, several smelters, including Hubei Chukai Metallurgy and Guangdong Yuxin Nonferrous Metal, began unit maintenance or technology upgrades, lowering secondary lead output.