Home / Metal News / Lead / The Impact of Power Rationing on the Lead Industry Chain
The Impact of Power Rationing on the Lead Industry Chain
Sep 29,2021 13:07CST
Source:SMM
Jiangsu required all companies to halt production for maintenance from 0:00 on September 16 to 24:00 on September 30.

Impacted Regions

Anhui, Jiangsu, Hunan, and some areas in Guangdong

Power rationing policy

Jiangsu required all companies to halt production for maintenance from 0:00 on September 16 to 24:00 on September 30. The companies should adopt one production schedule from the three stipulated plans: operating only 4 days in one week, operating only 6 days from September 16 to September 30, or reducing production by 60%.

The impact on the supply side

The production of secondary lead was affected in Anhui, Jiangsu, and Guangdong.

One smelter in Jiangsu was impacted, of which the production is estimated to be reduced by 3,000-4,000 mt during the one-week production restriction in September.

One smelter was affected in Guangdong, but the output reduction was slight as it only halted production for one day every week.

The smelters in Anhui were required to reduce production by 20%, but the production cut has not been implemented as the facilities in most plants cannot be partly shut down due to the equipment and process limitations. Only the small smelters have stopped production due to the environmental protection inspections, so the current impact of power rationing on the secondary lead production is limited. The production cut has been mainly caused by the weak market.

Most refined lead smelters in Hunan reduced production due to the power rationing, and the spot premiums stood high this week. The refined lead smelters in Guangdong slightly cut the weekly production by 10%.

The impact on the demand side

The power rationing was intensified, especially in Jiangsu, Guangdong, and Anhui, where the power consumption was required to be reduced by 20-40%. Most companies started to lower the operating rates since September 23. Hence the operating rates of the lead-acid battery plants fell significantly. The power rationing will extend until September 30, so the operating rates are expected to decline further this week.

The impact on lead prices and the price forecast

The supply of lead ingot was limited due to the intensifying power rationing, which dragged down the expectations of the inventory increase of lead ingots. The demand of the lead ingots was also affected by the production curtailment, so the restocking level is expected to decline before the National day holiday. The primary lead and secondary lead smelters are likely to deliver goods at premiums. The secondary lead prices will remain higher than the primary lead prices in some regions. Holders actively shipped goods before the National Day Holiday, and some quotations stood at discounts. The downstream users are expected to restock raw materials before the holiday this week, but the restocking level may fall due to the production curtailment amid the power rationing in Jiangsu and other regions.

Price change in 2021

The most traded SHFE lead contract has fallen by about 2% from the beginning of the year, and LME lead has risen by about 8%.

lead
production
power rationing

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news