SHANGHAI, Aug. 11 (SMM) – The drop in silver price multiple is expected to help lower losses suffered by Chinese lead smelters, SMM foresees.
Lead concentrate TCs have grown a lot heading into this year, but most lead smelters still suffer losses because of falling lead and silver prices. The silver price multiple is in direct proportion to lead concentrate prices. Hence, any falls in the multiple will be favorable to lead smelters.
In China, one large lead smelter in Hunan already lowered the multiple in August and some large smelters in Henan will also decrease the multiple in Sep. Some large lead smelters plan to decrease the multiple by 1-2 percentage points, SMM learns.
If a tonne of lead concentrate contains 1,800 grams of silver, the 1-2 percentage points cut will reduce cost by 59.1-118.3 yuan per tonne for lead smelters with SMM #1 silver prices quoting 3,280-3,290 yuan/kg.
However, the drop in silver price multiple should be limited as ore suppliers’ profits have also narrowed considerably due to weak lead, zinc and silver prices.
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