SHANGHAI, Jul. 15 (SMM) – SMM’s latest survey of 12 domestic secondary lead smelters revealed the average operating rate at the surveyed smelters in June rose by 3.43 percentage points from May’s average of 37.23% to 40.66%.
Operating rates at smelters with capacities above 150,000 mt/yr rose by 5.62 percentage points MoM to 46.69%, while the average rate at small smelters with capacities below 100,000 mt/yr jumped by 20.09 percentage points MoM to 38.93%. Medium smelters posted a slight 0.96 percentage point decline to 35.15%.
Among large smelters, Yuguang Gold & Lead completed maintenance and had resumed normal production. Medium smelters Anyang Jinpeng and Xinxiang Asia Metal Recycling reported an additional 3,000 mt in secondary lead output, but this was offset by production cuts at Jiangsu New Chunxing Resource Recycling and Xinyu Nonferrous Metals Recycling. The higher operating rates at small smelters were mainly attributed to the resumption of production at Tianjin Toho Lead Recycling.
In addition to the influence of environmental protection inspections and tight liquidity at the end of the second quarter, the rebound in operating rates was also driven by stable lead prices during June. #1 lead prices had fallen from an average RMB 14,800/mt in February to RMB 13,800/mt in May due to unending negative news, including the US fiscal cliff fight, termination of QE3, unresolved European debt issues, and slowing growth in China. Secondary lead prices also fell by RMB 800/mt over the same period, but lead prices did rise for six straight trading days in late May and early June. Since lead prices have been close to cost lines, recent price increase have some secondary lead smelters believing lead prices will finally bottom out in June and give a boost to secondary lead prices.
Positive expectations for downstream demand are also behind growing confidence among secondary lead smelters. Despite recent price war and destocking in electric vehicle battery markets, the high demand season for electric vehicle batteries typically falls in June, so most secondary lead smelters were upbeat toward June’s battery market and encouraged to maintain normal production.