SHANGHAI, Mar 1 (SMM) – In March, production recovery from maintenance and holidays is likely to bolster lead supplies in China while a seasonal lull, weak auto sales and new national guidelines for electric bikes would likely keep lead consumption weak, which is set to pressure lead prices on the Shanghai Futures Exchange, after prices posted strong performance in the last week of February.

The most active SHFE April lead contract climbed more than 4% in the week ended March 1.

A slew of primary lead smelters, including Hunan Yuteng, Hunan Yinxing and Yunnan Zhenxing, are expected to recover production from maintenance in March. This is estimated to boost output by 30,000-35,000 mt in March.

For secondary lead, small and medium-sized smelters closed for long periods and large smelters scaled back operations around the Chinese New Year holiday. Output of secondary lead in China is expected to grow by 15,000-20,000 mt this month as profit recovery on higher lead prices is enough to prompt smelters to resume production.

Lead prices also face downward pressure from the consumption front. SMM data showed that operating rates across Chinese producers of lead-acid batteries fell in March-April of 2017-2018, suggesting a cyclical low season for that period.

Auto sales were sluggish in January-February. Lead consumption is unlikely to find support from the auto sector in the near term.

The new national guidelines for electric bikes would be another headwind against lead consumption.

The new standard, effective from April 15, allows for heavier models, raising a maximum weight of from 44 kilograms to 55kg. However, the weight of most existing models in the market is more than 55 kg, with some exceeding 70 kg. This forces electric bike producers to lighten their products, driving them to lithium-ion batteries, which are lighter than lead-acid batteries.