China's Lead-Consumption Growth to Slow in Second Half, Ministry Predicts

                                                                               By Bloomberg News - Sep 8, 2010 2:17 PM

Refined-lead consumption in China, the world’s largest user, will expand at a slower pace in the second half than in the first six months as car sales grow at a reduced pace, according to a Ministry of Commerce report.

Consumption growth for the metal used in batteries is likely to be less than the 9 percent gain in the first half, the ministry said in the report on its website. The report, dated Aug. 26, didn’t give a forecast for consumption growth in the second half, nor for projected usage this year.

China, the world’s largest auto market, may need 3.61 million metric tons of lead this year, according to Beijing Antaike Information Development Co., a state-affiliated researcher. Demand, which rose 16.5 percent last year, may gain 8.3 percent this year, Antaike analyst Hu Yongda said Aug. 26.

The ministry’s forecast may add to signs China’s economic growth is cooling, cutting demand growth for commodities used in manufacturing. Gross domestic product grew 10.3 percent in the second quarter, lower than 11.9 percent in January to March. China’s economic activity “is decelerating,” Shen Jianguang, an economist at Mizuho Securities Asia Ltd., said on Sept. 1.

Three-month lead futures on the London Metal Exchange have dropped about 10 percent this year, and were at $2,180 a ton at 2:15 p.m. in Shanghai. That’s the second-worst performer among the LME’s six base metals after zinc, which lost 15 percent.

“In the second quarter, domestic car inventories started to climb, while sales and output growth slowed down, a trend we expect to continue for the rest of this year,” the report said.

Vehicle sales in China may climb 17 percent to a record 16 million this year, compared with a 46 percent surge in 2009, according to a forecast from the China Association of Automobile Manufacturers on Aug. 10.

China produced 2.22 million tons of lead in the seven months to the end of July, 3.8 percent more than a year ago, according to statistics bureau data. The nation’s lead-smelting capacity may increase to more than 5 million tons by the end of this year from 4.45 million at the end of 2009, the report said.