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May’s Average Operating Rate at Primary Lead Smelters Down
Jun 9,2013 13:52CST
smm insight
Source:SMM
The latest SMM survey of 49 primary lead smelters, with a total of capacity of 4.705 million mt/yr, shows the average operating rate at the surveyed smelters fell to 55.13% during May.
SHANGHAI, Jun. 9 (SMM) – The latest SMM survey of 49 primary lead smelters, with a total of capacity of 4.705 million mt/yr, shows the average operating rate at the surveyed smelters fell to 55.13% during May, down from April’s 57.64%, and with a total output of 220,300 mt.  
 
The average operating rate at large smelters with capacities exceeding 100,000 mt/yr was down significantly in May, falling from 74.70% in April to 70.71% in May, and primarily a result of a total cut in output of 5,000 mt at Yuguang Gold & Lead, Wanyang Nonferrous Metals, Anyang Minshan Nonferrous Metals and Shuikoushan Nonferrous Metals. 
 
Operating rates at medium smelters with capacities between 50,000-100,000 mt averaged 45.11% during May, down from April’s 47.55%. A loss of 20,000 mt in output from Tongguan Nonferrous, Tengyu Nonferrous, Cangwu Nonferrous, and Hanzhong Zinc, was partially offset by a 15,000 mt gain in output from Zhicheng Lead, Chengyuan Mining & Smelting, Haicheng Nonferrous, Humon Smelting, Yongning Gold & Lead, and Jiangxi Lead & Zinc.
 
Two reasons were behind the decline in output at medium and large smelters. First, both lead and silver prices were down. The average SMM #1 lead price fell by nearly RMB 300/mt during May, while #1 silver prices fell by over RMB 500/kg. Primary lead smelters had little incentive to maintain normal production as market prices for lead fell near cost lines, with profits for by-products also down sharply. Second, raw materials were in short supply. Falling prices for lead and silver caused some mines producing low-grade ore to halt operations. Larger mines, while still maintaining production, were also reluctant to sell goods and mainly concentrated on fulfilling long-term contracts, leaving domestic lead concentrate in short supply. In addition, a falling Shanghai/LME lead price ratio in early April allowed few profitable opportunities for importing concentrate, which was reflected in the 16% YoY decline in lead concentrate imports during the first four months of 2013. As a result, smelters reported difficulties in sourcing raw materials from both overseas and domestic suppliers. 
 
The average operating rate at smaller smelters rose from April’s 50.54% to 57.06% during May, and was due mainly to the resumption of operations at Baiyin Nonferrous Metals. 
 
SMM survey also revealed that fewer smelters had plans to conduct maintenance in June since #1 lead prices were rising. When combined with resumption operations at many smelters, SMM expects average operating rates at primary lead smelters to rise during June. 
 
 
 
 
China refined lead
primary lead production
operating rates at lead smelter

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