SHANGHAI, Jan. 21 (SMM) – Invernia Inc. announced last Friday to suspend operation at its Paroo Station Mine due to weak lead prices. London Metal Exchange lead posted marked rise in response. However, SMM considered the impact on China’s lead market to be limited.
Paroo Station Mine produced about 80,000 tonnes of lead concentrate in 2014, making up 1.47% of the global total. However, concentrates from the Australian mine are less attractive to Chinese smelters as they contain little silver.
Moreover, TCs for Chinese lead concentrate have been rising lately, indicating an easing of concentrate shortage. SMM finds in the latest survey that several lead smelters cut production for maintenance in January, with further curtailments expected in February, which may presage a decline in lead concentrate demand.
SMM also understands that lead concentrate stocks at Chinese ports kept growing and have now increased to 80,000 tonnes (Pb content), helping offset the supply fall caused by the closure of Paroo Station Mine.
That being said, lead prices may gain impetus briefly from hype about the news. Besides, markets now expect that any further slump in prices may result in masstive stoppages at mines.
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