Lead social inventories fell after 3-week increase

SHANGHAI, Nov 22 (SMM) – Inventories of lead ingots in China came off from a three-month peak in the week ending November 22, as reduced price advantage of secondary lead drove consumers to primary products and as smog alerts disrupted shipments to warehouses. 

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin shrank 4,500 mt from a week earlier to 35,600 mt as of November 22, ending their three straight weeks of increase. 

Environmental curbs extended supply tightness of secondary lead in some regions, which coupled with narrower margins at producers, continued to cut discounts of secondary refined lead. This drove downstream lead-acid battery mills to procure primary lead as feedstock. 

As of November 22, prices of secondary refined lead were close to that of SMM 1# lead, with trades even occurring at premiums of 25-50 yuan/mt during the week. SMM assessed that the average price of SMM 1# lead fell to the lowest of the year at 15,600 yuan/mt this week. 

Henan province on November 19 activated orange smog alert for heavy air pollution. While this barely impacted refined lead output, traffic restrictions on vehicles with lower emission standards hampered the delivery of cargoes to social warehouses. 

SMM expects the decline in social inventories of lead ingots to slow down next week given limited demand from lead-acid battery producers and supply recovery after the smog alert. 

Prices of secondary lead will receive strong support from costs as battery scrap traders would not sell at lower prices.