August is coming to an end. Will the continuous decline in primary lead smelter inventory come to an end? [SMM Analysis]

This week (2024.8.26-8.30) is the last week of August. Compared to the end of July, lead ingot supply is more abundant in the spot market, and the continuous decline in primary lead smelter lead ingots may come to an end. What changes have occurred in the spot market in the last week of August compared to the last week of July? What changes have occurred in the fundamentals of the lead market? SMM brings you the answer.

Reviewing the last week of July, queuing for delivery was the main keyword. At that time, lead prices continuously hit new highs, the price spread between the front-month and next-month contracts continued to expand, and market funds were highly active. Downstream battery companies concentrated on picking up goods, leading to over-selling of smelters' inventories and queuing for delivery. According to SMM survey at that time, the delivery cycle of smelters in Henan was scheduled until mid-to-late August, and there was a mismatch between supply and demand for branded lead. Although the import window had opened, a large number of refined lead and crude lead import orders had not yet fully arrived, and the domestic supply of lead ingots was relatively limited.

As the end of August approaches, on the one hand, after the completion of long-term orders in August, the situation of pre-picking long-term orders in September has almost not occurred. With lead prices running weakly, downstream showed low enthusiasm to stockpile, and inventory depletion at smelters was slow. On the other hand, imported refined lead orders have gradually entered the market or downstream enterprises in August, overdrawing part of the lead consumption. Except for a few battery companies picking up goods from nearby social warehouses, downstream battery companies have not concentrated on stocking up at low prices. The lead import window closed in late August, and new orders for imported lead were not as frequently traded as before. The last few batches of imported refined lead also entered the domestic market at the end of the month. By the end of August, the spot market for refined lead was relatively loose, and primary lead and secondary lead smelters generally shipped at large discounts. As the price spread between the spot and futures markets expanded this week, trading in the trade market gradually improved. In September, some smelters' inventories may gradually transfer to social warehouses, but attention still needs to be paid to the performance of downstream consumption orders and the realization of pre-holiday stocking demand.