Eastern Bloc refined production

China s entry into the world of lead and zinc could not have been more different from the circumstances in the other countries in the former Eastern Bloc. Prior to the mid-1980s China s refined lead production was no more than 225 kt/a and zinc output was around 300 kt/a. From the mid-1980s, however, there was, a sharp increase in mine production of both metals that, initially, was much greater than the rise in refined output. The development of new mines was the direct result of official policy to promote the domestic lead and zinc industries to... 

A useful summary of levels and trends in mine and smelter production, and of developments in refined metal consumption is provided by the industry metal balance. The balance can be drawn up for particular areas or regional markets, but most commonly covers the Western World, see Table 2.2. It pulls together the various elements of Western World lead supply and demand (including, separately, net trade with the Eastern Bloc in concentrates and refined metal), and focuses attention on the overall balance between them, with metal surpluses or deficits expressed in terms of an apparent change in stocks over a given period (usually a quarter or a year). In this way, the prevailing market position can be (fairly) accurately assessed and compared with developments in price and other market indicators (like reported stocks, turnover, etc). The construction of a metal balance also often forms the basis of forecasts of future trends in supply, demand and price (see Chapter 16). 

The battery sector is likely to account for a smaller share of overall refined lead consumption in the Eastern Bloc countries as a whole, than in the West. It is probably a more important end-use market in those countries (the former USSR, Poland, Czechoslovakia) which have relatively well-developed vehicle production facilities. Vehicle production, having declined sharply in the last few years, is now estimated at a little over 2.5 million units, about 5 per cent or so of total world output. The former USSR continues to account for about two-thirds of this. 

While concentrates and refined metal constitute the major material flows in lead, and are the ones for which regular statistics are most readily available, other industry raw and intermediate materials and products are also traded between East and West. Although accurate data is limited, China has been both a small importer and exporter of lead scrap in recent years, as have the Eastern European countries. In addition, there has been a small two-way trade in lead bullion in recent years. North Korea has regularly exported some 10-20000 tons of bullion annually, mainly to Japan, while the former USSR and Bulgaria have been minor, but sporadic, importers. The former USSR has also required the import of automotive lead-acid batteries, which it has satisfied with purchases from Italy and the former Yugoslavia, and from other Eastern Bloc countries. 

Since 1990, lead prices have been undermined by several factors. The onset of recession has held down consumption, but rather less for lead than for other metals. More importantly, the former Eastern Bloc countries (the USSR, in particular) have emerged as major exporters of refined metal to the West. Thus, although Western World production has fallen short of consumption so far in the 1990s, refined metal stocks (particularly those held in LME warehouses) have risen alarmingly. However, producers have been slow to respond to what appears to be a permanent structural shift in the industry. 

Many forecasts, or projections, of future lead prices are based around some form of supply/demand analysis. Conventionally, the starting point is the construction of a metal balance, linking forecasts of raw material availability, refined production, refined consumption, and including trade flows in concentrates and metal between Western countries and the Eastern Bloc (see Chapter 2 for historical lead industry balances). This ensures a measure of consistency between tbe various elements. The intended end result is a forecast of potential metal surpluses or deficits, and thus expected future changes in industry metal stocks. This, in turn can be used as a basis for forecasting future price trends through an iterative process which attempts to maintain the consistency of price, production and consumption projections. 

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