SHANGHAI, Oct 14 (SMM) - The output of secondary lead across China stood at 368,800 mt in September, down 11.34% on the month and up 32.12% on the year. Meanwhile, the output of secondary refined lead recorded 365,400 mt, down 5.09% on the month and up 35.87% from a year ago. The cumulative output of secondary refined lead in January-September rose 40.11% from last year.
According to SMM research, the output of secondary lead fell more significantly than estimate, mainly caused by the following reasons: 1) The power rationing policy intensified in late September, reducing the output of some smelters in Jiangsu, Hunan and Anhui; 2) Some smelters in Anhui, Guangdong and Hubei carried maintenance amid the arrivals of the environmental protection inspection team; 3) The smelters were not interest in producing as the lead prices plummeted in late September, and the operating losses once expanded to more than 500 yuan/mt, which was the leading cause of the falling output of secondary lead.
In October, the smelters in Guangdong, Hubei and Anhui resumed the production after the National Day holiday as the environmental protection inspection drew to a close. The operating losses of secondary lead also narrowed amid the rally of lead prices entering October. However, the power rationing policy remains in some regions including Anhui and Jiangsu because the power supply is still tight, preventing some smelters from resuming their production. In addition, there are also maintenance plans among smelters including Anhui Tianchang and Jiangxi Xinya.
Generally speaking, the increase and decrease of output among individual smelters will largely be offset by each other. However, the profitability of secondary lead is still uncertain. As such, the output of secondary lead is likely to fall again with at a slower pace.