Higher By-product Silver Revenue: Where Does the Main Increase in Silver Production of Primary Lead Smelters Come From? [SMM Analysis]

According to an SMM survey, from January to September 2024, the cumulative production of silver by-products from lead smelters increased by 6.47% YoY. Based on the survey's expectations, the top ten silver-lead smelters in China are expected to see a cumulative YoY increase of 5.95% in silver by-products in 2024, with the main increase coming from the Henan region.

On one hand, due to the long-term low lead concentrate TC, lead smelters have adjusted the grade of raw materials fed, prioritizing high value-added materials. This has led to an increase in the procurement of lead concentrates rich in silver and other metals, despite the lower lead grade in these raw materials. For lead smelters, improving the recovery rate of silver and other by-products is far more valuable than pursuing lead metal production. In 2024, while the lead metal production of primary lead smelters slightly declined, the production of refined silver significantly increased.

On the other hand, the opening of the lead import window in Q2 2024 expanded the profitability of silver processing trade in lead-silver concentrates for smelters. Smelters with silver processing trade qualifications (manual) saw a significant increase in their enthusiasm for processing lead-silver ores. Additionally, influenced by the macro environment and the development of the PV industry, the price trend of silver metal in 2024 was stronger compared to 2023, which also allowed lead smelters to achieve higher "coefficient difference" revenue.

Looking ahead to 2025, due to the slow and simultaneous recovery of overseas lead-zinc mines and smelting capacity in 2024, the supply of lead concentrates in 2025 may ease compared to 2024, but the rebound in TC is expected to be very limited. Smelters are not optimistic about the silver content in new projects. Although the high value-added attribute of silver will become the main revenue for lead smelters, the supply of lead ore containing silver will still be in undersupply, and the growth rate of silver production in lead smelters may relatively slow down in 2025.