SHANGHAI, Feb 26 (SMM) – Many secondary lead smelters in China have yet to resume operations by the last week of February, due to quarantine rules on migrant workers and as transport restrictions lifted costs and squeezed profits, according to the SMM survey conducted this week.
Following the outbreak of the COVID-19 coronavirus epidemic, over 90% of secondary lead smelters in China suspended operations during the Lunar New Year holiday this year, compared to a proportion of over 50% in previous years.
Quarantine rules on workers who travel back to work have contributed to the slow resumption of secondary lead smelters who have a large proportion of workers being migrant.
Meanwhile, restrictions on transport, especially transportation across provinces, affected the procurement of the raw material—battery scrap and deliveries of finished goods, growing transport costs and squeezing profits at secondary lead smelters. That also deterred smelters from reopening.
Compared to secondary lead smelters, the downstream consumer—lead-acid battery producers in China recovered faster, which led to a smaller-than-expected increase in social inventories of lead ingots.
SMM data showed that the proportion of secondary refined lead production to the total lead ingot supply in China has exceeded 40%, as the secondary lead sector thrived in China in recent years with Beijing pushing an environmentally-friendly economy and having introduced the principles of extended producer responsibility (EPR) for recycling used lead-acid batteries.
A broad recovery across secondary lead smelters is expected in March, according to the latest survey, while uncertainty surrounding battery scrap supply lingers.
Battery scrap traders usually reopen five to seven days later than secondary lead smelters, and are likely to remain closed for longer this year.
