SMM Pb Survey: Mixed Operating Rates at Domestic Lead Smelters in March

SHANGHAI, April 12 (SMM) –A recent survey of 35 primary lead smelters (total capacity: 2.77 million mt/yr) revealed the following insights:

1) Mixed Operating Rates at Domestic Lead Smelters in March
According to the survey, operating rates at medium-size smelters (capacity less than 100kt/yr) improved significantly as producers resumed normal operating rates in March after conducting unit maintenance during February.  Operating rates at larger smelters (capacity 100kt/yr and above) were down significantly since larger lead producers faced greater inventory pressures, as well as higher costs and environment protection requirements  compared with smaller producers.  Although transactions in domestic lead markets during  most of March were made above RMB 15,500/mt, traded prices failed to rise above RMB 16,000/mt, forcing larger producers to cut output.

2) Mixed Views Over 2Q Outlook
Downstream demand was negatively affected in early March by the Chinese New Year holiday and other factors, resulting in sluggish demand during the seasonal high demand period.  Operating rates over the second half of March improved steadily, with levels reaching as high as those from late 2009, but prices still remained below RMB 15,850/mt due to ample spot supply.  The failure of traded prices to breakout during the seasonal high demand period has depressed smelter outlook for lead prices during the coming low demand period in 2Q.  However, some producers are optimistic given high costs and falling output since the start of 2010. 

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