China lead prices rise 40 pct as supply falls

By Polly Yam

HONG KONG, Jan 6 (Reuters) - Chinese prices of spot lead, used in batteries, have risen 40 percent in the past month, buoyed by reduced supply and stronger winter demand for automobile batteries, industry officials and traders said on Tuesday.

The rise in China, which consumes a third of the world's lead, exceeded a 16 percent rise the same month on the London Metal Exchange MPB3, where the metal price was $1,122 on Tuesday.

It marks a turnaround after Chinese prices lost nearly half their value between last September and early December on reduced demand triggered by the global financial crisis that spurred Chinese lead smelters to cut production.

"Many small smelters have shut down," said a sales manager at Yuguang Gold and Lead (600531.SS), the country's top producer of lead. "And battery makers are buying more lead."

Battery makers had cut lead purchases in the fourth quarter of last year because of volatile prices and had used up their stocks of the metal, he added.

"Demand for batteries is improving," said a purchasing manager at a large battery manufacturing plant in Hubei province that consumed about 140,000 tonnes of lead last year.

He said many car owners in China fixed their vehicles and changed batteries before the Lunar New Year, boosting battery consumption ahead of the festival, which falls on Jan. 26 this year.

Spot lead traded at about 12,000 yuan ($1,757) per tonne in Shanghai on Tuesday, up from 8,600 yuan on Dec. 5 but down from 17,600 yuan in mid-September last year.