Lead social inventories grow as traders withhold from offloading cargoes ahead of tax cuts

SHANGHAI, Mar 22 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, rose this week as traders held back from offloading cargoes to await lower taxes and as high spot premiums and weaker consumption thinned trades.

SMM data showed that overall lead social inventories expanded to 41,000 mt as of Friday March 22, while stocks across Shanghai and Guangdong fell close to 800 mt from a week ago to 8,300 mt.

After the announcement of lower VAT, spot lead premiums rapidly grew while prices of futures dropped earlier this week. Domestic lead was quoted in premiums of 300-400 yuan/mt over the April contract on the Shanghai Futures Exchange, up from 50-100 yuan/mt in the previous week.

This, together with cautious sentiment among downstream consumers, lowered spot trades. Weakening lead-acid battery consumption kept producers purchasing cautiously.

Lead stocks in Shanghai shrank this week as traders and smelters relocated their cargoes after Shanghai Qisheng Storage & Transportation Management was no longer the SHFE-approved warehouse for delivery.