[Pb] CBI Survey - Operating Rates at Primary Lead Smelters

SHANGHAI, July 16 (CBI China) -- A recent CBI survey of 25 major domestic primary lead smelters (total capacity: 2.41 million mt/yr) revealed the following insights:

    1) Operating Rates

    Domestic lead prices tracked the upward trend of LME lead prices during June. Rising lead prices, as well as tight raw material supply and high costs, helped improve trading sentiment, with traded prices moving in the RMB 13,300-13,600/mt range as a result. Although select small smelters shut down for unit maintenance, overall output still increased steadily.

    2) Lead Concentrate

    Although domestic average lead prices were up 10% to RMB 13,258/mt during June, the domestic/LME lead price ratio remained near 8, a result of high prices of imported lead concentrate. Operating rates at domestic lead and zinc mines increased slightly, but the TC/RC of lead concentrate (55-60%) fell to RMB 2,500/mt due to improved demand. In this context, primary lead smelters reported no relief from tight raw material supply.

    3) Prices Forecast

    Bulk commodity prices have risen since late May, but prices levels will be challenged during July as poor economic news and slowing demand growth is causing sell-off activity in commodity markets.  Lead prices fell, finding support at RMB 13,000/mt, but the proportion of lead producers surveyed who have become pessimistic has increased to 40%, since demand from lead-acid storage battery manufacturers was worse than expected despite of the seasonal peak demand period.

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