[Pb] Inefficient Lead Capacity in Henan Province Suspended on Environment Concerns

SHANGHAI, Aug. 21 (SMM) -- Since last week media reported that local lead smelter in Fengxiang county, Shaanxi province was to mainly blame for a lead poisoning that caused hundreds of children to have excessive lead level in their blood, market players will be very concern about the environment protection that will likely occur in lead smelters in national wide caused by this case.

    Market insiders said today Henan authorities gathered major lead smelters in the province to discuss environment protection. In addition, sources report that the government plans to orders lead smelters who still use insufficient lead smelting process and lack environment protection facilities to suspend production on August 23rd.

    Henan, the largest province for lead production in China, owns lead smelting capacity of 1.45 million mt by June 2009, and lead output in July was 122kt in the province, with the relatively advanced lead smelting capacity, oxygen-enriched bottom-blown furnace, as a proportion of approximately 30%, and this portion of capacity is expected to be operational normally.

    The provincial regulation is not only a kind of self-inspection based on environmental protection cases in other provinces, but also in line with national stimulus plans for nonferrous metal industry which stipulates 600kt/yr of insufficient lead smelting capacity will be eliminated. In addition, current lead concentrate remains in short supply, so lead output is expected to experience a 35% decline over next one or two month in Henan province.

    This news increased inquiries in Shanghai market at noon, as lead prices failed to track the upward trend of LME lead prices since June and kept moving in the RMB 13,300-13,800/mt range given weak demand. Meanwhile, LME lead prices remained high, and lead concentrate prices climbed as well due to tight supply, increasing production costs at smelters. In this context, cargo-holders were firm at RMB 13,500/mt during this week, waning downstream purchasing interest.

    At present, the details about environment protection policy in Henan province remain unknown, and measures in other large provinces for lead production are unknown as well. Inventories in major regional markets remain high, and lead downstream consumers still have limited low-priced inventories. In addition, the uncertain economic recovery still restricts the recovery of lead consumption.

    Next week, domestic lead prices are expected to stabilize at RMB 14,000/mt, but will unlikely climb to RMB 15,000/mt unless the downstream demand improves significantly.

Copyright © 2009, CBI (Shanghai) Co., Ltd. All Rights Reserved.

None of this material may be used for any commercial or public use in any form or means, without the prior written consent of CBI China. For reproduction issue, please contact us by email: metalresearch@cbichina.com or tel:86-21-51550040