Lead and zinc production by China, the largest metals consumer, advanced to a record in September as producers increased output following price gains and demand for both metals remained robust.
Output of refined zinc jumped 24 percent to 505,000 metric tons, and production of refined lead gained about 19 percent from a month earlier to 421,000 tons, the statistics bureau said today. That’s a monthly record for both metals, according to traders and analysts.
Production of zinc expanded 24 percent in the first nine months to 3.83 million tons, and lead output rose 4.5 percent to 3.06 million tons in the same period, the bureau said. Zinc is used to galvanize steel while lead is used in batteries.
“Utilization rates have picked up across metals as summer maintenance programs ended,” said Li Ye, an analyst at Minmetals Starfutures Co. “The pickup in lead and zinc prices provided an incentive for smelters to increase production.”
Zinc for three-month delivery on the London Metal Exchange added 6.3 percent in September, while three-month lead futures surged 10 percent. Still, the metals are the worst performers on the London Metal Exchange this year as supplies outpaced demand.
Zinc supply exceeded demand by 253,000 tons in the first eight months of the year, compared with a surplus of 53,000 tons a year ago, the World Bureau of Metal Statistics said yesterday. The lead market had a 16,300-ton surplus in the period, compared with a 19,900-ton deficit in the same time last year, WBMS said.
Global lead and zinc demand will lag behind supply this year and next, the International Lead & Zinc Study Group said Oct. 11. The lead surplus will be 90,000 tons in both years, while zinc supply will top demand by 233,000 tons this year and 161,000 tons in 2011, the ILZSG said.
“It’s the typical strong-demand season from battery makers so lead demand is quite good at the moment,” said Li Junchao, an analyst at Western Mining Co. “After operating close to or below the cost of production earlier this year, it’s no surprise to see output increase when prices gain.”