Singapore 28/07/2016 - Production stoppages triggered by environmental checks by Chinese authorities are lifting tin, lead, and nickel prices on the Shanghai Futures Exchange, market participants said.
Beijing started environmental inspections in several provinces in mid-July and, while not targeting any particular industry, there has been growing talk of base metal smelters being affected.
Tin smelters in Yunnan, Guangxi and Jiangxi have been forced to stop production since last week, Shanghai Metals Market (SMM) said in a report this week. Coupled with a month-long maintenance at China Tin Group, domestic tin supply in July-August will be affected, the Chinese metals research firm said.
China Tin Group in Guangxi province started a month-long maintenance shutdown of its 25,000-tonnes-per-year Ausmelt furnace on July 15.
"The shutdown will reduce China domestic refined tin supply, and coincide with an expected seasonal fall in ore supplies from Myanmar to other leading smelters in Yunnan province," the International Tin Research Institute said last week.
Myanmar is China's largest supplier of tin ore, accounting for almost all imports into the country.
"SHFE tin is getting support due to the shutdowns," an analyst with a Beijing-based futures brokerage told FastMarkets. "In fact, most of the metals that are facing disruptions to their supply are seeing support to their prices."
The SHFE September tin contract closed 440 yuan higher at 121,340 yuan on Thursday.
While the SHFE September lead contract finished at 13,605 yuan on Thursday, down 150 yuan, analysts believe the contract will rise in the near term owing to production stoppages caused by the environmental checks as well as improving demand.
"SHFE lead is expected to rise after its correction due to the recent improvement to its fundamentals," China's Jinyuan Futures said on Thursday.
The environmental inspections have affected secondary lead producers while refined lead smelters are operating at low levels due to tight concentrate supply, the futures brokerage said.
At the same time, the peak demand season for lead-acid batteries is nearing and battery factories have increased operating rates, it added.
SHFE nickel remains supported by concerns over mining disruptions in the Philippines but stoppages among nickel pig iron (NPI) producers are also buoying prices, market participants said.
Stoppages were largely said to be concentrated in Inner Mongolia, with Beijing Antaike estimating that around 10,000-20,000 tonnes per month (nickel contained) of output is affected.
Local reports now suggest that several NPI producers in Shandong province have been asked to shut by environmental authorities.
The SHFE September nickel contract surged 1,740 yuan to close at 81,390 yuan on Thursday.
(Editing by Mark Shaw)