Domestic lead concentrate TCs climb up in 2018 on limited demand

SHANGHAI, Jun 26 (SMM) – Treatment charges (TCs) of Chinese domestic lead concentrate rose all the way since the start of this year as maintenance works and production limitations on environmental concerns continued to weigh on demand at smelters, SMM believes.

TCs for domestic lead concentrate (Pb 50%) averaged 1,550 yuan/mt in metal content in June, up 300 yuan/mt from January’s average of 1,250 yuan/mt, according to SMM assessments.

Maintenance works at smelters since the start of this year kept lead concentrate procurement at relatively low levels. In addition, large-scale smelters in Jiyuan, Henan province cut their production by 30-50% in June to comply with the national requirements on environmental protection. This further suppressed the demand for lead concentrate.

Stable supply of lead concentrate also accounted for the increase in TCs. Large-scale mines received minimal impact from environmental probes as their production technologies and waste treatment met the standards. As weather gets warmer, mines in Qinghai, Xinjiang and Inner Mongolia are expected to step up their production in June. This is set to drive up overall output of lead concentrate.

Such supply overhang of lead concentrate is likely to linger for a while on intensive environmental inspections across China, SMM believes. Average TCs for July are assessed at 1,650 yuan/mt in metal content.