Lead social inventories rose after 10 weeks of decline

SHANGHAI, Oct 18 (SMM) – Social inventories of refined lead in China rebounded as expected in the week of October 18, ending their ten straight weeks of decline, as stockpiles at smelters were transferred to social warehouses and as consumption slowed in the downstream lead-acid battery market. 

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin were 2,900 mt higher from October 11, standing at 21,000 mt as of October 18.

Lead ingot stocks at primary smelters rose to 18,500 mt after the National Day holiday, which resulted in the shipments to social warehouses. Downstream producers of lead-acid batteries were cautious about restocking on higher lead prices above 17,000 yuan/mt in the second half of the week and weaker purchases by end-users. 

Deepened discounts of secondary lead dampened transaction of primary lead, and this also prevented the stocks from falling. 

SMM assessments indicated that, as of October 17, prices of secondary refined lead stood at discounts of 500-400 yuan/mt, ex-works, against the average prices of SMM 1# lead. This compared with discounts of 150-50 yuan/mt for primary lead at smelters. Quotes in the trade market came in at discounts of 50-20 yuan/mt against the SHFE November lead contract.

SMM sees further increases in social inventories of refined lead next week as bearish demand outlook keeps lead-acid battery producers on the sidelines. Current margins at secondary lead smelters may allow greater discounts of secondary refined lead.