Smelters' Inventory Transfer Resulted in Rebound in Lead Ingot Social Inventory [SMM Survey]

According to the SMM survey, as of September 2, the total social inventory of lead in five regions reached 20,300 mt, an increase of 3,200 mt compared to August 26, and an increase of 4,500 mt compared to August 29.

According to the survey, the recent trend in lead prices has been weak, and the spot market generally trades at a large discount. For example, the ex-factory quotes of lead smelters were at a discount of 200-100 yuan/mt to the SMM #1 lead average price, but downstream enterprises were not very enthusiastic about procurement. Therefore, some holders have transferred inventory to social warehouses, causing social inventory to rebound. At the same time, holders actively sold imported lead, with imported lead quoted at a discount of 400-100 yuan/mt to the SHFE lead 2409 contract (self-pickup). In addition, secondary refined lead smelters made shipments according to market conditions, with ex-factory prices of secondary refined lead quoted at a discount of 350-150 yuan/mt to the SMM #1 lead average price. The market supply was relatively ample, and downstream enterprises had more purchasing options, resulting in slow consumption of lead social inventory. Even with maintenance at smelters, lead social inventory continued to rise. In early September, primary lead smelter maintenance increases, tightening supply relatively, but smelters' in-plant inventory will remain high. The factor of holders transferring inventory still exists. In the short term, lead social inventory may continue to increase.