Reuters China's production of refined lead is expected to rise by about 10% or 260,000 tonnes in the H2 from the first 6 months of the year as new capacity comes onstream amid growing demand from battery manufacturers.
Industry sources said that higher production of refined lead which reached a record 459,000 tonnes in June means imports are unlikely to grow for much of the H2 after falling 7.5% from a year earlier in the H1 although traders had hoped weak prices on the London Metal Exchange would spur purchases by China.
The increased output is also unlikely to pressure prices of spot lead in the world's top producer and consumer of the metal, with support from rising demand in the second half.
Mr Hu Yongda an analyst at state backed research firm Antaike estimated that official data for refined lead production would reach 4.8 million tonnes by the end of the year. His forecast puts H2 output at up to 2.53 million tonnes compared with recorded output of 2.27 million tonnes for the H1. Demand for lead acid batteries is expected to account for about 70 percent of China's refined lead consumption this year estimated at more than 4.4 million tonnes.
Official data in June showed production of lead acid batteries jumped 71.5% from a year earlier and rose 9.8% from a month earlier high for the year of 16.83 million kilowatt hours. Production of electric bicycles, which traditionally peaks during summer months, driving demand for lead acid batteries, rose to a high for the year of 1.82 million units in June up 30.9% from a year earlier.
Analysts and sources at smelters said that demand for batteries is also expected to be supported in the Q4 when cold winter weather sees a peak in sales of replacement car batteries.
A sales manager at a large lead smelter in Henan said that. Lead demand in H2 will be better than the H1. Smelters in Henan, the country's top lead producing province, held almost no stocks and were keen to produce.
The Ministry of Industry and Information Technology has forecast the country's economic growth to rise in the second half as a raft of policies rolled out to boost economic activity gain traction.
A senior executive at smelter Anyang Yubei Gold and Lead said that our production will rise in the H2. Demand is quite strong currently. We have decided to start our new 120,000 tonne production line this month.
Traders and sources at smelters said that there was also a plentiful supply of lead concentrate to support strong production with June output at a record 395,000 tonnes of metal in concentrate.
Source - Reuters
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