SMM August 21 news:
According to SMM customs data, July refined lead exports were 2,178 mt, down 47.81% MoM and up 21.37% YoY; lead alloy exports were 599 mt, down 32.72% MoM and down 66.88% YoY; and other lead products exports were 36 mt, down 41.22% MoM and up 51.77% YoY. Exports of all lead and lead product categories generally weakened MoM.
On the import side, July refined lead imports were 9,215 mt, down 38.95% MoM but up 169.69% YoY; lead alloy imports were 26,495 mt, up 15.24% MoM and up 107.25% YoY, with import volumes staying high; and lead sheet and other lead product imports were only 112 mt. After the peak arrival of imports in June, the import premium for refined lead notably faded in July. The SHFE-LME arbitrage window narrowed, and China faced pressure to digest previously arrived inventory. Lead alloy imports showed stronger resilience, while other lead product imports shrank significantly.
In July, China's lead prices first declined and then rebounded. In early to mid-month, LME lead inventory climbed sharply to near a 14-year high, dragging the most-traded SHFE lead contract down to around 15,500 yuan/mt, a more than two-year low. Overseas lead ingot suppliers were reluctant to sell at concessionary prices, holding back from selling.
Looking ahead to August, the market sees a tug-of-war between longs and shorts and prices consolidate. On the supply side, maintenance at primary lead enterprises increases in mid-to-late month, tightening supply. Although losses in secondary lead have somewhat recovered, the MoM impact on refined lead production schedules remains at -22,300 mt. Overall supply stays low, and partial production resumptions cannot reverse the supply pattern. On the demand side, the traditional peak season for lead-acid batteries has fallen short of expectations. After the summer holiday, downstream is mainly restocking for essential needs, with limited stockpiling demand. Social inventory of lead ingots has risen to 75,000-79,000 mt, putting periodic pressure on prices.
SMM expects the most-traded SHFE lead contract to generally trade in a range of 15,500-16,200 yuan/mt. The implementation of maintenance at primary lead enterprises in mid-to-late month is expected to lift prices after a decline, but consumption will constrain upside room. Overall, the lead price performance in August is expected to be better than in July, with the inclination for overseas lead ingot inflows to China improving MoM.
