SHANGHAI, Nov. 8 (SMM) –

Lead Concentrate
According to the China Nonferrous Metals Industry Association (CNIA), China produced 267,200 mt (lead content) in lead concentrate during September, down 8.06% MoM. YTD output through September 2.1298 million mt (lead content), up 22.33% YoY.

Severe weather and natural disasters in major lead concentrate producing regions are behind the decline in lead concentrate output during September. Lead concentrate output from Inner Mongolia was down 9% MoM, while output in Sichuan and Yunnan provinces was down 40% and 23%, respectively. Frost in Inner Mongolia forced some small mines without heating facilities to halt operations. In Sichuan province, water leakage caused by continuous storms impeded underground mining operations and infrequent mud slides also posed hurdles for mining and transportation of lead concentrate. In Yunnan province, a 5.7- magnitude earthquake in Yiliang county caused production at local mines to halt, including mines at Yiliang Chihong Mining.

SMM data reflects a significant rise in lead concentrate output in other producing regions during September. Output rose by 30.4% MoM to 11,000 mt in Fujian province and was up by 18.11% MoM to 12,100 mt in Guangdong province. Output in Guangxi province was also up by 21.48% to 49,200 mt. Three factors are behind the sharp increase in output. First, lead price rallies during September allowed larger profit margins for mines. SMM data shows the average lead price hit a 4-month high of RMB 15,500/mt during September, increasing selling interest at mines. Second, demand for raw materials from primary lead smelters was up. An SMM survey of primary lead smelters showed the average operating rate at domestic primary lead smelters continued to rise in September, hitting 66.5%, or up 5.34 percentage points MoM, and helped drive up demand for raw materials. Third, lead concentrate imports were down by over 10% MoM during September due to an unfavorable Shanghai/LME lead price ratio.

Refined Lead
According to the CNIA, China’s refined lead output during September was 445,600 mt, up 0.5% from the previous month. YTD output through September grew by 10.45% YoY to 3.517 million mt.

Primary lead output during September rose by 2% MoM to 318,300 mt, and validated SMM survey results which pointed to an increase in operating rates at primary lead smelters. Higher lead prices encouraged smelters to increase output, but accelerated maintenance and commissioning of new production lines also added to supply. Anyang Minshan, Liaoning Haicheng, Jiangxi Jinde, Zhenxing Lead Industry, and Huludao Zinc Industry all completed maintenance during September. Yubei Gold & Lead also doubled output to 8,000 mt once its new production line came online in August and reached full capacity in September. Anyang Minshan and Yubei Gold & Lead contributed to an additional 11,000 mt in lead supply in Henan province last month, while no production cuts were reported from other medium or large-sized smelters in the province. SMM estimates the MoM increase in primary lead output during September in Henan province should actually be much higher than the 0.6% increase reported by the CNIA.

Refined lead output during September in Hunan province rose 18.69% MoM, while output in Yunnan province fell 6.85% MoM, but secondary lead output was down 3% MoM. Output in Anhui province was 52,100 mt, down 12.6% MoM, but output in Jiangsu and Hubei provinces was up 0.14% and 7.61% MoM, respectively, at 31,600 mt and 24,300 mt. SMM sources report that Anhui Huaxin, the largest secondary lead producer in Anhui province, reported a 15% increase in output during September, while output at Anhui Tongguan was also up slightly.  Since secondary lead output at Hubei Jinyang and Hubei Chukai, two major secondary lead producers in Hubei province, was unchanged from August levels, SMM believes overall refined lead output in Hubei province will show little change in September.