Lead social inventories fall on tighter supply of secondary lead

SHANGHAI, Aug 9 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, decreased this week as environmental curbs limited production at small secondary smelters. 

SMM data showed that lead social inventories across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin fell some 2,500 mt from a week ago to stand at 40,900 mt as of Friday August 9, after they climbed 5,000 mt in the previous week. 

Environmental probes in Henan and Jiangxi provinces drove raw material battery scrap to compliant smelters of secondary lead, tightening supplies at non-compliant small producers. This lifted offers of secondary refined lead to a discount of 50 yuan/mt to flat over the average prices of SMM #1 lead, as of Friday August 9. 

Greater purchases by lead-acid battery producers outweighed supply recovery at primary lead smelters, and this also accounted for the lower stocks. Demand from battery producers improved from a month ago as a high season set in. Price advantage drove consumers to primary lead.  

Lead inventories are expected to grow in August as primary smelters recover from maintenance and as secondary smelters ramp up production on higher margins. However, stocks are unlikely to see a significant rebound next week in view of the environmental issues and a time period for resumption.