Rebound from the high inventory of lead in Shanghai [institutional review]

In November 2021, lead prices in and out of the market first suppressed and then rose. Lun lead began to weaken from a high at the beginning of the month, and lead prices in Shanghai also started a continuous downward trend, and lead prices gradually stabilized and rebounded towards the end of the month.

Recovery of primary lead and maintenance of regenerated lead

According to ILZSG, the global lead supply will increase to 12.11 million tons in 2021, and the global lead demand will rise to 12.01 million tons, with an annual surplus of about 100000 tons. In October 2021, China produced 244500 tons of electrolytic lead, down 6.52% from the previous month and up 3.32% from January to October compared with the same period last year. It is estimated that the domestic output for the whole year will reach 3.2 million tons, with an annual increase of about 110000 tons.

Since the third quarter of this year, power cuts have appeared one after another in Hunan, Guangdong, Liaoning and other places in China, and the production of local lead smelting enterprises has been affected to varying degrees. In October, domestic primary lead smelting enterprises concentrated maintenance, Hunan Shuikoushan, Jiangxi Copper, Jiangxi Jinde and other enterprises all carried out annual maintenance, and the output of electrolytic lead decreased as scheduled. In early November, with the gradual easing of power cuts and the repair of profits of recycled lead smelters, there are obvious signs of lead smelters resuming work and increasing production, and it is expected to maintain the momentum of growth in December. After the relief of domestic power cuts in November, primary lead smelters resumed production one after another, but recycled lead enterprises such as Anhui Huabin, Huaxin and Shandong Zhongqing began to overhaul, and the growth rate of recycled lead market supply slowed down.

Inventory of lead ingots is still high.

The social inventory of lead ingots in China has been rising gradually since June 2020, and the accumulation range has been expanding, especially since April 2021, and the lead ingot inventory has repeatedly reached new highs. Since October, lead ingot stocks have gradually fallen back against the backdrop of reduced supply. According to the survey, at the end of November, the domestic social inventory of lead ingots was 143200 tons, and the inventory was in the decline channel; the inventory of the previous period also showed a downward trend, which was 131500 tons at the end of November. In overseas markets, LME lead ingot stocks in London have begun to pick up and are now rising to around 57000 tons, gradually accumulating slowly. On the whole, the domestic lead ingot inventory level is still high in recent years, which still forms a great pressure on the lead price.

It is estimated that the new domestic production capacity of recycled lead will reach 2.81 million tons in 2021, an increase of about 1.5 million tons or 63% over 2020. From the distribution of new production capacity, it is mostly concentrated in Henan, Guangxi, Guizhou and other places, and these areas account for 45% of the new production capacity. The period from 2020 to 2021 is the concentrated release cycle of domestic compliance recycled lead production capacity, which leads to a sharp increase in domestic lead ingot supply. Recycled lead is greatly discounted to primary lead in the third quarter of this year, rapidly squeezing the consumer market of primary lead, prompting more primary lead to be transferred to social warehouses, and social stocks of lead ingots continue to accumulate to high levels.

The bottom of lead processing fee has stabilized.

In November, lead concentrate processing fees stabilized and rebounded, and imported TC prices were mostly quoted at US $50 per dry ton. In November, the mainstream transaction price of domestic 50% grade lead concentrate to the factory was 1000Mel 1350 yuan / metal ton. However, at present, internal and external processing fees have remained at a two-and-a-half-year low, indicating that the current tight pattern of lead ore supply has not changed.

China imported 116800 tons of lead concentrate in September, down 4.3% from a month earlier and 38.5% from a year earlier, according to customs data. From January to September in 2021, the cumulative import of lead concentrate reached 872000, a cumulative decrease of 11.84% compared with the same period last year. Imports of lead concentrate in September exceeded 100000 tons for the third time this year, compared with more than 100000 tons in January and August this year.

From the perspective of enterprise raw material inventory, due to the impact of power cuts in some areas, superimposed delivery brand refineries had more overhaul in October, and the demand for raw materials decreased slightly, but the absolute level of raw material inventory remained low, and lead ore supply was still tight in November. This state is expected to be maintained by the end of the year.

The downstream demand is OK, and the enterprise purchases on demand.

In terms of downstream demand, according to market research, the comprehensive operating rate of domestic lead-acid battery enterprises at the end of November was 76.9%, which was higher than that in the previous period. The terminal consumption performance of the lead battery market is mediocre. After the battery enterprises increased production, the shortage in the early market basically alleviated. Due to the successive decline in lead prices, the rise in risk aversion in the industry, and the decline in new orders from production enterprises, most of them focused on the delivery of pre-orders, which is expected to continue until the end of the year.

On the whole, in the field of downstream consumption, the growth rate of the low-speed electric vehicle industry represented by electric bicycles is declining. From January to August, a total of 23.88 million electric bicycles were produced nationwide, an increase of 19.5 percent over the same period last year, and the cumulative growth rate continued to decline, according to the Ministry of Industry and Information Technology. The situation of sluggish consumption in the domestic automobile industry at the end of the year is difficult to change. According to the latest data of the China Automobile Association, from January to September, automobile production and sales reached 18.243 million and 18.623 million respectively, an increase of 7.5% and 8.7% over the same period last year, and the growth rate continued to slow down compared with the previous period. From the perspective of the fourth quarter, the lead downstream battery consumption field is not optimistic.