SHANGHAI, October (25) – Lead price in China’s market has been rising since the beginning of 2016, and SHFE 1612 lead, the most active one, advanced to its daily upward limit on Oct. 25, the highest level since October 16, 2012.
What’s the driving force behind the surge?
“The surge is due mainly to tight spot supply in China’s market,” SMM lead analyst explains.
In early September, some domestic primary lead smelters resumed output, but the products mainly served for term contracts, failing to ease spot supply shortages, SMM survey shows.
Meanwhile, production at domestic lead smelters has also been restricted by tight ore supply, and the condition is expected to worsen as small domestic mines will suspend operation with the arrival of winter.
Moreover, China’s environmental protection inspections have intensified since 2016. The Ministry of Environmental Protection sent 10 teams to 20 provinces for environmental protection inspections from October 21. Small secondary refined lead smelters in Shandong, Henan and Jiangsu have suspended output again, SMM learns, which will also reduce market supply.
“Lead consumption in China’s market shows no signs of big improvement, but supply has dropped sharply, so China’s lead prices are expected to keep rising momentum for the foreseeable future,” SMM expects.
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