SHANGHAI, Feb. 3 (SMM) – SMM learns that China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) will not only have radioactive detection on lead ore (HS code starting with 2607), but will also have quality and weight inspections from 2017, according to AQSIQ’s document on statutory inspection catalogue adjustment. So far, AQSIQ has not released any relevant information about this, but relevant market participants have received the notice, requiring them to show the inspection certificates in import and export business. There are no such requirements before.
SMM expects the adjustment to make limited effect on the market in a short term.
First, lead concentrate supply is tight in China and inventories in ports are at lows. Output at foreign mines dropped in 2016. Moreover, Korea Zinc expanded capacity, increasing demand for lead concentrate. Hence, lead concentrate supply reversed to tight balance from oversupply in foreign markets. Small amounts of mines will resume operation in the first half of 2017, restricting imports. Inventories in ports fall to around 40,000 mt (Pb Content) on February 3.
Second, the closing of import window will restrain lead concentrate imports. Imported lead concentrate reversed to gains from losses in October 2016 and the gains even widened to RMB 2,000/mt briefly. However, imported lead concentrate reversed to losses again since the beginning of January 2017. Besides, Chinese lead smelters built stocks in Q4 2016. So, imports of lead concentrate will be limited in Q1 2017.
To sum up, the adjustment will make small effect on the market due to limited lead concentrate imports. Importers and exporters will need one more month to apply inspection certificates after the adjustment, and lead concentrate cost is estimated to increase about RMB 20/mt, SMM learned.
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