BEIJING (Asian Metal) 29 Jun 07 – Chinese lead surged up by around RMB2,000/t (USD262/t) in the past two weeks, and the market is very strong, supported by the tight supply. Participants foresaw that the metal will continue the upward trend in the short term.
“Although lead price retreated on LME in recent two days, Chinese lead still keeps the strong trend,” a producer in Henan told Asian Metal. “Some producers quote RMB19,200/t (USD2,516/t) ex works for the materials, compared with RMB19,000/t (USD2,490/t) on Wednesday, but most deals are concluded at RMB19,100/t (USD2,503/t) ex works in the local market.”
According to the source, lead price jumped up from RMB17,200/t (USD2,254/t) half a month ago to RMB19,200/t (USD2,516/t), with the increase of RMB2,000/t (USD262/t). “The markup is so sharp that we can’t believe it, and some participants said that large amount of funds control the market to prompt the price to go up, but I think that it is impossible, as lead resources is not tight in the global market, and moreover, China is the major lead producer in the world, so it is difficult for a few people to operate the large market,” he stated.
The producer said that affected by the tightness of lead concentrate, some producers reduced the output, driving the metal to climb up. In addition, the demand increase from electrical bicycle industry also attributes to the price rise. “Chinese lead market will keep firm in the following days,” he said.
The smelter reduced the production to 1,000tpm from 3,000-4,000tpm in May for maintenance turnaround early June.
Another smelter with a capacity of 80,000tpy offer RMB19,200/t (USD2,516/t) ex works for lead, up by RMB200/t (USD26/t) compared with that on Wednesday. “Chinese lead market keeps bullish these days, supported by the tight supply and the firm market on LME,” he said, adding that they hold few materials on hand now.
According to the source, they are negotiating with a miner to sign a long-term contract. “We plan to fix the price of lead concentrate 60%min at RMB16,000/t (USD2,097/t), and in view of the strong trend in lead market, it seems difficult to reach an agreement in the following days,” he said. “It is still hard for Chinese producers to import the raw materials, due to high lead price on LME.”
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