China's Hunan, Guangxi Check Lead Smelters

HONG KONG, Aug. 25 -- Hunan, the second-biggest producer of refined lead among China's provinces, is checking lead smelters in the wake of lead poisoning in Shaanxi province, a provincial environmental official said on Tuesday.

    China, the world's top lead producer, has shut as much as 240,000 tonnes of annual lead smelting capacity in its top producing province of Henan after reports of lead poisoning in a neighbouring province, smelter officials said on Monday. 

    Hunan has more than 600,000 tonnes of lead smelting capacity, including the 100,000 tonnes of capacity owned by Zhuzhou Smelter (600961.SS: Quote).

    "The result of the checks will come in another few days," the official said, adding that possible closures of lead smelters would depend on the findings.

    Zhuzhou's lead smelter was closely monitored by the local environment authority, given it was a large state-controlled firm, a company executive said.

    The firm was running the smelter at full rates and planned to build another 100,000-tonne-a-year lead facility, he said.

    The Henan closures boosted LME prices by more than 7 percent on Monday.

    "The lead market is one of the most finely balanced. The surplus in the first half was around 37,000 tonnes and before this, I was expecting a surplus of 20,000 tonnes next year," David Moore, an analyst at Commonwealth Bank of Australia, said on Tuesday.

    "If suppply is impaired for a sustained period of time it will become quite serious. Lead consumption rose 25 percent in the first-half versus last year and given the trends in auto production it is probable that a large proportion will have gone to end-demand."

    Checks also were being tightened on lead smelters in Guangxi, the fifth-biggest refined lead producing region in China, a smelter official said.

    "Environment authority officials are coming soon, again. They were just here in July," said the official at Nanfang Nonferrous, which has 80,000 tonnes annual lead smelting capacity.

    Around 80,000 tonnes of Guangxi's annual lead smelting capacity of more than 200,000 tonnes had been shut so far this year, he added. Nanfang's facility was running normally.

    In Yunnan, the fourth-biggest refined lead producing province in China, major lead smelters were running normally, an official at Yunnan Chihong Zinc (600497.SS: Quote) said. "We have not heard of any forced closures."

    Yunnan Tin's (000960.SZ: Quote) 30,000-tonne-a-year lead facility had been closed during a renovation project, while a company source said the new lead smelter would have capacity of 100,000 tonnes by 2010.

    (Source: Reuters)