REFILE-WRAPUP 1-More provinces join China lead checks

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* Hunan, Guangxi join Henan, Shaanxi in lead smelter checks

* While provinces take action, closures seen short-lived

* Output loss will support but upside appetite limited

By Nick Trevethan and Polly Yam

SINGAPORE/HONG KONG, Aug 25 (Reuters) - The impact of a Chinese lead poisoning scandal spread to another two provinces on Tuesday, threatening further cuts in supply from the world's top producer of the metal.

Hunan, the second-biggest producer of refined lead among China's provinces, and Guangxi, which ranks number five, are checking smelters after protests by parents at a lead and zinc smelter operated by Dongling Group in Changqing, Shaanxi Province, and at a manganese smelter in Hunan earlier this month.

China's pollution and lax product safety standards have long been a source of tension and unrest, particularly when residents of pollution hotspots -- dubbed "cancer villages" because of high disease rates -- feel they are being ignored. [ID:nPEK220682]

"The result of the checks will come in another few days," a smelter official in Hunan said, adding that possible closures of lead smelters would depend on the findings.

Henan province has already shut as much as 240,000 tonnes of annual lead smelting capacity, equivalent to around 6 percent of China's total, sending prices of the heavy metal MPB3=LX used to make automotive batteries soaring 8.7 percent on the international market on Monday. [ID:nHKG368091]

Analysts said the market would continue to be underpinned by the threat to supply, but investors were reluctant to drive prices, which have doubled from $999 at the start of the year, too much higher.

"This is a major supply issue for the market in the short term," Mark Pervan, senior commodities analyst at ANZ, said.

"But prices are already very inflated and investors will be uncomfortable pricing in more upside on this supply adjustment, but it will put a floor under lead."

Ingestion of large amounts of lead may result in anaemia, muscle weakness and brain damage. For more information on how lead affects health, click: [ID:nHKG58491].

For information on pollution in China, click [ID:nPEK169088])

China, which supplies more than a third of the world's refined lead output, updated its industry standards about 2 years ago. But analysts from state-owned research group Antaike have said as much as 60 percent of the nation's capacity does not comply with the latest standards.

Hunan has more than 600,000 tonnes of lead smelting capacity, including the 100,000 tonnes of capacity owned by Zhuzhou Smelter (600961.SS).

In Guangxi around 80,000 tonnes of capacity has been shut of the more than 200,000 tonnes across the province.

MORE IMPORTS POSSIBLE

China, which has seen huge growth in automobile production, is likely to have to go to the international market to replace the 20,000 tonnes of monthly output that has shut.

It imported 11,500 tonnes of refined lead in July, and that could rise sharply as the closures start to bite. "The lead market is one of the most finely balanced. The surplus in the first half was around 37,000 tonnes and before this, I was expecting a surplus of 20,000 tonnes next year," David Moore, an analyst at Commonwealth Bank of Australia, said.

"If supply is impaired for a sustained period of time it will become quite serious. (China's) lead consumption rose 25 percent in the first-half versus last year and given the trends in auto production it is probable that a large proportion will have gone to end demand."

As long as the closure edicts stem from provincial authorities and not Beijing, analysts and traders expect them to be fairly brief.

"The central government is not asking us to close. It is the local government's decision," a source at one of the closed smelters said. "The closure should last for two months at the most. If longer, who is going to contribute to the GDP?"

If more cases of poisoning turn up, Beijing may step in and impose stricter controls, Lan Ke, analyst at Southwest Securities in Beijing said, but for now it would be left to the provincial governments.

That view was also echoed by ANZ's Pervan who said the market was unlikely to see anything similar to the lengthy outage at the Magellan lead mine in Western Australia, which was shut for around two years ago when the port of Esperance banned lead shipments over environmental health concerns.

The mine, owned by Canadian-listed Ivernia (IVW.TO) is starting shipment of stockpiled concentrate and will re-open the mine next year. [ID:nSYD252052]

"The Chinese will try and address this a little more quickly than the Australians did at Magellan where they had to reconstruct transport infrastructure.

"There will be pressure to get these plants cleaned up quickly and bring them back on line. (Editing by Michael Urquhart)