Operating Rates at Secondary Lead Smelters Edge Lower in December

SHANGHAI, Jan. 21 (SMM) – SMM’s survey of 12 major domestic secondary lead smelters shows an average operating rate of 59.40% during December, down 0.56 percentage point from the average 59.96% in November.

The average operating rate at large smelters was down 2.55 percentage point to 76.67%, while the average at medium smelters fell 1.99 percentage point to 43.30%. The average operating rate at smaller smelters staged the biggest decline, falling 6.75 percentage point to 56.52%.

SMM attributes the decline in average operating rates to two reasons. First, prices for both secondary lead (Pb ≥ 98.5) and refined secondary lead (Pb ≥ 99.97) from scrap batteries both fell during December. SMM data showed the average price for #1 lead during December was RMB 14,730/mt, the lowest level since September 2009, helping drive prices for secondary lead and refined secondary lead to fall RMB 250/mt and RMB 330/mt over the same period. Falling prices for downstream products also discouraged secondary lead smelters from producing. Second, scrap battery prices remain high. Despite a slump in lead prices, scrap battery prices only fell by RMB 50/mt in December, keeping raw material costs for secondary lead smelters high and squeezing profit margins. In addition, secondary lead smelters in north China find it difficult to recycle scrap batteries since waste liquid in batteries freeze during the winter. According to the SMM survey, large and medium smelters were less affected by price movements than small smelters due to sufficient scrap battery inventories and stable downstream demand.