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Supply-Side Environmental Protection-Driven Production Restrictions Emerge One After Another, with Maintenance Plans of Primary Lead Smelters in Certain Regions Undergoing Changes [SMM Analysis]
Dec 20, 2024, at 9:41 am
[SMM Analysis: Environmental Protection-Driven Production Restrictions Emerge One After Another, Altering Maintenance Plans for Primary Lead Smelters in Certain Regions] With Q4 already halfway through, year-end maintenance plans for primary lead smelters have been gradually announced. Although the production of primary lead smelters has not yet been affected by smog and other factors, significant production reductions are still expected in December.
By the end of November, primary lead smelters' year-end maintenance schedules had been released (Near Year-End, Will Refined Lead Supply Decline Again? A Sneak Peek at Primary Lead Smelters' December Year-End Maintenance Expectations [SMM Analysis]). However, due to environmental protection-driven production restrictions, smelters experienced greater-than-expected production cuts. In mid-to-late December, some smelters adjusted their December maintenance production schedules, with the unexpected supply reduction in December from primary lead smelters mainly originating from the Hunan region. The specific details are as follows:
Previously, in the anticipated impact of reduced primary lead smelters' electrolytic lead production in December, some smelters had already mentioned the potential issue of tight crude lead supply. At that time, the market still expected crude lead supply to recover in late December. However, after the scope of environmental protection-driven production restrictions expanded this week, multiple electrolytic lead and crude lead production facilities in Chenzhou, Hunan, experienced unexpected shutdowns. Consequently, electrolytic lead production is also expected to gradually decrease due to insufficient raw material supply at the front end. Additionally, two smelters in the region have advanced their originally planned routine maintenance, which was scheduled for the New Year or around the Chinese New Year, while another smelter, previously expected to resume operations after maintenance, has delayed its recovery due to insufficient crude lead inventory.
In other regions, smelters in Henan and Inner Mongolia have resumed commissioning lead concentrate with improved grades, and the marginal decline in electrolytic lead production had already ended in early December. In the spot market, smelters in Hunan and Guangdong reduced their December long-term contract supplies due to maintenance-related expectations. This week, spot premiums in these regions surged rapidly, and the reluctance to sell spot inventory was significantly higher than in other regions. Downstream just-in-time procurement in nearby areas resulted in only limited transactions.
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