21 May 2010 09:32

Maintenance work at smelters could support refined lead prices

Changsha. May 20. INTERFAX-CHINA - Several Chinese lead smelters are currently conducting maintenance work on their refined lead production facilities, which would reduce China's refined lead supply in May and give support to domestic refined lead prices, industry insiders told Interfax at a May 20 conference.

"We began to carry out maintenance work in early May and will continue to do so for at least 25 days. We therefore expect to see a reduction in our refined lead output for May of 10,000 tons," an employee surnamed Peng from medium-sized lead smelter Hunan Shuikoushan Nonferrous Metals Group Ltd.(Shuikoushan) told Interfax at the Lead and Zinc Summit 2010 in Hunan Province's Changsha, held by asianmetal.com.

Another Shuikoushan employee, surnamed Chen, told Interfax that the "...current gloomy state of refined lead prices on the Chinese market is one of the factors which contributed to the decision to undertake the (maintenance) work" at this time.

The refined lead price on the Shanghai Yangtze River Nonferrous Metals Market started its downward trend in mid April, with the price per ton falling from RMB 16,000 (2,343.43) on April 12 to RMB14,600 (2,138.38) on May 20.

"The European debt crisis and the recent introduction of new policies regarding China's real estate sector are the major reasons behind falling commodities prices, including refined lead on both the domestic and international markets," Peng said at the conference.

Meanwhile, Mysteel Information analyst Lei Xiaofang told Interfax that medium sized lead smelter Anhui Huaxin Lead Industrial Group is also conducting work on its facilities. This will reduce their refined lead output in May by 5,500 tons. He added that Zhuzhou Smelter Group has also been conducting maintenance work since late April.

According to Lei, medium sized lead smelter Wangyang Lead Smelting Group also conducted maintenance work for ten days in early May.

"China's refined lead output will undoubtedly fall in May," Lei added.

"Refined lead prices have now fallen to such a low that they are almost equal to the average production costs for Chinese lead smelters. It is likely that maintenance is being done in order to reduce production and support prices," a Shanghai-based trader surnamed Fan told Interfax at the conference.

Shuikoushan's Peng added, "The global economy is still on the up, and China's automobile industry is developing quickly. Lead demand will therefore be quite strong this year, and so I expect China's refined lead prices to rebound before the start of June, most likely staying above RMB 15,000 ($2,196.97) per ton for the remainder of 2010."