NANCHANG, Aug 22 (SMM) – Lead supply deficit in China is expected to narrow this year as additions of secondary lead capacity may outweigh growth in consumption, according to SMM analyst Xia Wenming.
Capacity build-out of secondary lead will be more concentrated to licensed producers as the industry is stepping up upgrading, she told delegates at the SMM Recycled Lead Battery Summit on Thursday August 22 in Nanchang of Jiangxi province.
New policies have been released this year to regulate the access to lead-containing scrap such as waste batteries for secondary lead producers. This will facilitate the capacity release at licensed smelters and squeeze out non-compliant capacities, she believed.
The analyst expected the overall capacity of secondary lead to exceed 6 million mt by the end of this year, with battery scrap treatment capacity above 10 million mt. Despite capacity expansion, increase in production of secondary lead may fall below expectations, pressured by losses and environmental impact, she said.
SMM data showed that domestic production of secondary lead in January-July lost around 30,000 mt year on year to stand at 1.1 million mt.
The primary lead market, on the other hand, is likely to see lower capacity this year amid a shortage of lead concentrate, according to Xia. Supply thingness of lead concentrate extended this year on the slow release of new capacity and smaller imports.
In 2018, environmental issues limited the new capacity release for lead concentrate to only 49,400 mt, in metal content, compared with an estimated 100,000 mt of new capacity. Official data showed that China’s production of lead concentrate fell 5.9% on the year to 1.33 million mt in 2018, with imports dipping 4% to 1.23 million mt in physical content.
For this year, the analyst expected LME lead to trade between $1,725-2,200/mt with SHFE lead contracts at 15,500-17,500 yuan/mt. Spot prices of lead in the domestic market may edge lower and average around 17,000 yuan/mt.