SHANGHAI, Apr. 15 (SMM) – SMM survey of operating rates at 49 domestic primary lead smelters with a total capacity of 4.075 million mt/yr reveals that refined lead output at the surveyed smelters was up in March by 1.1% MoM to 217,100 mt. The average operating rate at these smelters calculated on an annualized basis fell to 54.83% in March, down 0.25 percentage point from February.
The average operating rate at large smelters with capacities exceeding 100,000 mt/yr was up from 70.33% to 71.60%, and the rate at small smelters with capacities below 50,000 mt/yr also rose sharply from 34.34% to 52.98%, and was due to the end of maintenance at several smelters. Large smelters such as Shuikoushan Jinxin Lead, and smaller smelters including Gejiu Chuangyuan Economic & Trade, Gejiu Tongfu Metals, Mengzi Mining & Metallurgy, and Xinjiang Hengchang Smelting, all restarted production in March.
Although output at medium smelters increased in March by 1,700 mt to 100,800 mt, the average daily output was down from February levels, and with the average operating rates falling by 3.86 percentage points MoM to 43.55%.
Maintenance last month at Liaoning Haicheng Nonferrous Metals, Jiangxi Jinde Lead, Chengyuan Mining & Smelting, and Luoyang Yongning Gold & Lead, resulted in a drop in lead output totaling 9,000 mt. However, output rose by 12,000 mt during the same period at Guiyang Yinxing Nonferrous Metals, Hunan Huaxin Nonferrous Metals, Zhenxing Lead Industry, and Henan Shibang as these smelters completed maintenance and resumed production.
The average daily output during March at smelters maintaining normal production was down for the following reasons.
First, falling lead prices and weak demand discouraged smelters from increasing or even maintaining output. SMM data show the average lead price fell by RMB 300/mt in March, down from February’s RMB 14,845/mt and close to smelter cost lines. As a result, smelters were also reluctant to sell goods, and when facing the approach of the seasonal low-demand period for lead-acid batteries, smelters turned cautious when planning output.
Second, raw material shortages hampered lead production. Labor shortages and equipment maintenance had left only a few medium and large-scale domestic mines in operation following the Chinese New Year, so domestic lead concentrate supply fell sharply. Concentrate imports were also limited due to an unfavorable Shanghai/LME lead price ratio. In this context, raw material inventories at smelters fell below 30 days production, which caused many to limit output.