SHANGHAI, Oct. 14 (SMM) – According to a SMM survey of 12 major Chinese smelters, the average operating rate at secondary lead smelters surged in September and was due largely to the resumption of production at Anhui Huaxin Lead Industry Group Company.
The average September rate jumped by 18.55 percentage points to 56.15%, up sharply from the 37.60% average in August.
The rate at large secondary lead smelters with capacities over 150,000 mt/yr recorded the steepest gain of 36.37 percentage points MoM to an average 66.49%. The average rate at small smelters with capacities less than 100,000 mt/yr rose by 11.77 percentage points MoM to 73%, while the rate at medium-sized smelters with capacities between 100,000-150,000 mt/yr rose to 43.97%, up only 2.47 percentage points MoM.
The rise in the average operating rate was mainly attributed to the resumption of production during September at Anhui Huaxin Lead Industry Group Company, the largest secondary lead smelter in China. The company began stopping processing of battery scraps in mid-July on environmental pollution concerns, but later restarted the production line in mid-August. As of September, the company had resumed production on 35 lines.
The higher rate at secondary lead smelters in September was also boosted by two other factors.
First, the smelters were encouraged to carry on production since secondary lead prices remained stable during September. SMM data reveals that #1 lead ingot prices tumbled by RMB 550/mt to RMB 14,075/mt, but prices for secondary lead remained comparatively firm due to volatile supply after smaller smelters shut down and due to workers leaving for the harvest season in September.
Second, increasing demand from ignition battery producers also contributed to rise in the average operating rate. Lead-acid battery producers, especially larger ones, stepped up production as sales of ignition batteries surged in September, pushing up demand for lead alloy. As a result, Hubei Chukai Metallurgy Company and Baoding Anjian Nonferrous Metal Company, both as raw material suppliers to lead alloy producers, ramped up processing of battery scraps.
Meanwhile, some secondary lead smelters signaled that tight liquidity limited purchases of battery scraps at the end of September, but which only had a limited effect on the average operating rate.