Some Lead Plants in China's Henan Province Cut Output on Power

By Helen Yuan

July 25 (Bloomberg) -- Power cuts in China's Henan province, which accounts for almost half of country's output of lead, have forced some smelters to cut production by as much as half.

The power shortages started from the weekend without any warning, Liu Quanying, a manager of Jiyuan Jinhui Lead Co., said today by phone from Jiyuan city. Jinhui is operating at 50 percent of its capacity, down from 70 percent, Liu said.

China's smaller zinc and lead smelters on July 12 agreed to cut output by 10 percent for three months because of a power shortage. The price of lead, used in making batteries, is down 16 percent this year on concerns of oversupply.

``The power shortage has an impact on production and the lead market at a time the metal inventories are already low,'' said Wu Tianxiao, Shanghai-based analyst with researcher CBI China Co. ``If it lasts until the end of August, the loss will be about 10,000 tons.''

China is in its sixth year of power shortages, as economic growth of more than 10 percent annually for the past five years fuels demand from factories and homes.

Jiyuan and Lingbao cities make up about 60 percent of the provincial output, he said.

Lingbao Cuts

Cheng Guojun, a manager at Jiyuan Wanyang Smelting Co., one of the three biggest producers in Lingbao city, said the power shortage have forced the company and some competitors to cut output by 30 percent.

Xin Ling Refining Co., the biggest lead producer in Lingbao, has cut production of byproducts including gold, silver and zinc oxide, sales manager He Yonggang said.

``We hope the power shortage will ease in mid-August,'' Wanyang's Cheng said by phone today.

Henan Yuguang Gold & Lead Co., the world's largest producer, is running at full capacity and isn't suffering from a power shortage, Li Huiling, an investor relations executive at the Jiyuan-based company, said today over the phone. The company has an annual capacity of 300,000 metric tons a year.

``The larger smelters will have better power supplies than their smaller rivals,'' CBI's Wu said.

To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net