SHANGHAI, Dec. 4 (SMM) – According to the China Nonferrous Metals Industry Association (CNIA), China’s lead concentrate output was 258,400 mt (lead content) in October, down 3.28% MoM. Output for the first ten months grew by 19.84% YoY to 2.389 million mt (lead content).

Three major factors were behind the decline in domestic lead concentrate output during October. First, spot lead prices in October fell below RMB 15,000/mt due to concerns over the European debt crisis. Although large enterprises reported stable production, small mines became reluctant to move goods and began cutting output. Second, SMM’s survey indicated operating rates at primary lead smelters fell 0.83 percentage point during October, depressing lead concentrate demand. Furthermore, smelters actively imported lead concentrate from June to September as the Shanghai/LME lead price ratio hovered around 8.0, leaving inventories high at domestic smelters. By the end of September, smelters were maintaining 1-2 months concentrate inventories, so demand for domestic lead concentrate was negatively affected. Third, several regions imposed restrictions on explosives supply during October, restricting mining operations at some domestic mines and causing supply of domestic lead concentrate to fall.

Lead concentrate output in Inner Mongolia, Sichuan, and Guangxi, all major lead concentrate producing regions, fell during October by 5.02%, 31.17%, and 16.78%, respectively. Production in Inner Mongolia was negatively affected by frost, while increases in electricity prices in Sichuan and Guangxi dampened output in those two regions.