Average Operating Rate at China Large Secondary Lead Smelters to Fall to 32% in 2016

SHANGHAI, Nov. 23(SMM) - The average operating rate is expected to slip to 33.4% in 2015 and 32% in 2016, SMM lead analysts reckoned at its annual summit in Shanghai.

Losses expanded at large secondary lead smelters following the VAT rebate cut from 50% to 30% in July. In Response, average operating rate slipped to a low of 24% in October. The VAT rebate cut increased costs by RMB 400/mt for lead smelters. Besides, by-products, namely plastic shell and flue ash, prices also headed for losses, leading to further losses at smelters.

As such, SMM expects secondary lead production in China to edge up 10.3% to 1.93 million mt in 2015 from 1.75 million mt in 2014. And domestic secondary lead output will grow slightly to 1.97 million mt in 2016 due to environmental protection crackdowns. 

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