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Spot lead TCs in Oct dip to $20-30/mt on tighter concentrates supply

Hong Kong (Platts)--11 Oct 2017 715 am EDT/1115 GMT


Spot treatment charges for imported lead concentrates in China fell to $20-$30/mt in October, from $30-$40/mt in September, on tighter concentrate supply in both China and overseas, Chinese industry sources said Wednesday.

"Due to less domestic concentrate supply, some Chinese smelters have to keep relying on imported ones despite the poorer spot TCs," a concentrate trader in Northwest China said.

The trader said for imported lead concentrates with high silver content, TCs are higher at around $40-$50/mt.

TCs, the fees paid by mines to smelters for converting the concentrate into refined lead, are a key source of revenue for smelters.

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China's mined lead imports peaked in August at 155,164 mt, up 2% year on year, but imports in the first eight months fell 1.6% year on year, to 907,545 mt, data from the General Administration of Customs showed.


CHINA'S Q4 LEAD CONC IMPORTS GROWTH SEEN LIMITED


Key Chinese lead producer Jiangxi Copper in its October lead sector report said the higher August imports were due to Chinese smelters storing concentrates for winter. It said excluding this factor, China's fourth-quarter lead concentrate imports might not grow much as no tangible growth in overseas output was expected this year.

State-run metals consultancy Beijing Antaike said the falling lead concentrate imports this year were due to the foreign lead sector adding an estimated 200,000 mt/year of new smelting capacity this year, thus tightening supply.

Also, the lower TCs and London Metal Exchange refined lead prices performing better than domestic prices so far this year have hampered imported lead concentrate trade, Antaike said.

The agency said spot TCs for imported lead concentrate have been low so far this year, with average TCs of $40.80/mt in the first half, lower than a year earlier. Back in June last year, TCs were $130-150/mt, Antaike data showed. The H1 2016 average was undisclosed.

Antaike said with the warmer climate in China, lead mines in North China gradually resuming output, and the end of the environmental protection checks in Hunan Province, a key Chinese lead mining base, could boost spot concentrate supply in the coming months, supporting TCs.

China's mined lead demand is forecast to hit 3.478 million mt in 2017, up 12% year on year, with its mined lead output this year seen at 2.03 million mt, down from 2.23 million mt last year, due to domestic environmental controls, Antaike data showed.

China's mined lead imports in 2017 are estimated to be 1.236 million mt, higher than 705,000 mt last year, with the domestic mined lead deficit seen at 211,000 mt this year, widening from deficit of 170,000 mt last year, Antaike said, noting that the above estimates did not consider the lead contained in imported zinc concentrates.


RISING RECYCLED LEAD OUTPUT MAY HIT LONG-TERN CONC IMPORT DEMAND


Chinese market participants foresee the growing recycled lead output in China could affect demand for imported lead concentrates in the long run.

A concentrate dealer in Shaanxi Province said: "The government's urging of the use of more eco-friendly, recycled resources, and the resultant rise in domestic recycled lead output in the years ahead may hit demand for imported concentrate in the long run."

China is to lift the ratio of national recycled refined lead output by 2020, to 45% from 33% in 2015, according to the government.

--Joshua Leung, newsdesk@spglobal.com
--Edited by Jonathan Dart, jonathan.dart@spglobal.com




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