Chengyuan Plans Maintenance as Lead Concentrate Costs Jump

SHANGHAI, Sept. 9 -- Guangxi Chengyuan Mining & Smelting Co., a Chinese lead smelter, said it will place its production capacity on maintenance for a month as the surging costs of raw materials reduced profit margins.

    Maintenance will start from Sept. 15, Huang Xuyan, head of the company's trade department, said today in a phone interview from Lanzhu, Gansu province, where he's attending a conference. Chengyuan produces around 100,000 metric tons of lead metal a year and imports almost all the concentrates needed.

    Lead, used in car batteries, has surged 17 percent this month in London to a 16-month high as investors bet China will shut smelters after a spate of metal poisoning cases. Lead in Shanghai's spot market is up 9 percent in the same period, suggesting manufacturing demand is lagging behind investors' price bets.

    "Chinese lead prices have been slow to catch up with London, making it hard for us to import the metal ore," Huang said. A production cut is possible should the price gap widen, he said, without elaborating.

    (Source: Bloomberg)