LME lead prices may continue to outperform SHFE lead

SHANGHAI, Mar 7 (SMM) - Many countries imposed sanctions on Russia, and the energy crisis in Europe continued to ferment. The production costs of non-ferrous metals are expected to rise, the production may be cut, and the LME lead stocks have dropped by over 1,000 mt on a weekly basis. However, the LME cash to three month backwardation has turned to contango. LME lead prices are expected to remain volatile at a high level, while unexpected accidents may affect the prices. LME lead is expected to trade at $2,365-2,455/mt this week.  

As the domestic secondary lead smelters cannot purchase raw materials smoothly in the early stage of the implementation of the new value-added tax (VAT) policy on lead-acid battery scrap, the domestic lead prices are expected to move upward supported by the higher costs and expectations for tighter supply. However, the lead consumption market is approaching the traditional off season, the lead ingot inventory increases, and the spot discounts expand. The lead prices may move downward. The most traded SHFE lead contract is expected to trade at 15,250-15,700 yuan/mt this week.  

The spot prices are expected to move between 15,200-15,500 yuan/mt this week. The primary lead smelters actively sold the goods as the supply increased steadily and the lead prices rose. The deliverable brands of primary lead planned to increase their shipments to delivery warehouses. The goods under small orders are expected to be sold at discounts. The secondary lead smelters sharply reduced their procurements of lead-acid battery scrap after the Caishui No. 40 was implemented, and they held firm to the quotations. The discounts of secondary refined lead are expected to be around 200 yuan/mt. The lead-acid battery market will enter the traditional off season soon, and the lead prices stand high, so the battery companies are likely to mainly purchase lead ingots under long-term orders.