China's Lead Smelters Say Restarts Depend on Price

SHANGHAI, Sept. 15 -- Officials at Chinese lead smelters ordered to close by the authorities deny that they plan to resume production right after the national day holidays in October.

    There was no set window for resumption, which will depend on prices, said smelter and lead association officials.

    "The closures were not due to the big event [of the anniversary], but was caused by a serious lead poisoning incident in Shaanxi," said a physical trader in Shanghai.

    Market speculation is that smelters ordered to close on environmental concerns may restart post-holiday as local governments ease up on inspections and return their focus to achieving gross domestic product targets.

    "I hear some Yunnan smelters will resume capacities in October, but I do not have a breakdown of either capacities or names of the smelters," said Hu Yongda, an analyst from Antaike.

    However, an official at Yunnan Gejiu Lead Assn told MB he had not heard of any resumption plans.

    "We are busy engaged in consolidation of the industry; we are taking this rare chance to update our technical equipment," he said. "Our plan is to replace old equipment, but honestly, for just one furnace, it costs a large amount of money."

    "Some small smelters are reluctant to do that, as a result, they may be closed forever," he said. "For those who agree to update the technology, it may take them years to reach full capacity."

    "We have no timetable yet for resuming operation," said an official at Yuguang Lead and Zinc, China's top lead producer, which has suspended around 60,000 mt/yr of capacity in the past few weeks.

    "I cannot say for sure if we will resume operation after October. It largely depends on the supply of concentrates and more importantly, profitability," he said.

    Supply of concentrates remains tight, compared to zinc, and current treatment charges are around USD 85-90/mt, a bit higher than USD 80/mt a week ago, but still below the USD 150/mt needed to cover costs, said the association official.

    "Besides, in light of the price gap between Shanghai and LME lead, offers should be no lower than USD 400/mt so as to earn money," said the Yuguang official.

    Shanghai lead is still more than RMB 2,500/mt (USD 366/mt) lower than its LME counterparts on Monday, although LME lead prices have been falling hard in the last few days.

    (Source: Metal Bulletin)