53% Market Players in China Pessimistic over Lead Prices This week, SMM Survey

SHANGHAI, Apr. 26 (SMM) – SMM survey of 30 industrial insiders finds that 53% of them expect LME lead to fall below USD 1,730/mt this week and SHFE 1606 lead to drop to RMB 13,250/mt, citing downstream poor demand.

Lead-acid battery sectors still remain in the off-season and thus report falling orders. Most of those battery makers choose to cut production. Besides, some of them have equipment, environmental protection and liquidity problems, also cutting demand for lead. Secondary refined gains more favor from downstream buyers due to price edge, but trading for secondary refined lead also starts weakening currently. This mirrors downstream poor demand.

Primary lead supply stays ample in market, although a growing number of secondary refined lead producers cut or halt operation. Primary lead inventories in Henan are reported at near 40,000 mt and local smelters move goods out at large discounts owing to mounting inventories and cash strain.

7% market players see LME lead to challenge USD 1,830/mt this week and SHFE 1606 lead to grow to RMB 13,700/mt. Falling secondary lead supply will lend support to lead prices. More secondary lead producers in Shandong, Jiangxi, Hebei and Henan cut or suspend operation due to environmental protection crackdowns. More than half secondary lead producers halt production in Jiangxi. This cuts secondary lead supply.  Also, scrap battery prices also stay at highs with supply tightened in market.

40% investors believe that lead prices will move at current levels this week with LME lead around USD 1,760/mt and spot lead at RMB 13,200-13,400/mt. Crude oil and ferrous metals prices post large gains, boosting market sentiment in commodity market. Additionally, SHFE lead underperforms LME lead recently but technical indicators show mixed direction.