[SMM Analysis] RCs for crude lead fell, smelters reduced raw material purchases in April

At the beginning of March, the supply of crude lead produced with ore for primary lead smelters was tight and the RCs were slightly reduced. In April, RCs did not stop falling as smelters had expected amid tight supply of crude lead. Lead smelters that do not participate in the market trading are mostly those belonging to smelting groups of lead, zinc and other non-ferrous metals. Such smelters usually have stable supply support from the groups. Except for primary lead smelters that use crude lead as the main raw material for purchase (i.e., the purchase ratio of crude lead from minerals is 100%), most smelters will purchase crude lead based on the market price of precious metals, the richness of crude lead in a specific batch, and the crude lead RCs.

After experiencing a decline in lead concentrate TCs and crude lead RCs in March, primary lead smelters in Henan, Hunan and other places said that the output of refined lead was affected by crude lead production line maintenance. In April, they have no recovery plans. According to SMM research, the RCs for silver-containing crude lead, which could still be quoted at 500 yuan/ton before the Chinese New Year, have dropped to 200-300 yuan/ton. Primary lead smelters told SMM that the bullish expectations for silver prices in early March had been fulfilled, so the increase in silver partially compensated for the reduction in crude lead RCs. However, in late March, silver prices were high and stagnant, and the total supply of crude lead on the market was limited by the decline in ore grade and the operating rates of other smelters. The RCs for crude lead rich in good quality look set to fall. Many smelters in April temporarily canceled their plans to purchase crude lead and switched to a cautious wait-and-see approach.