SHANGHAI, Mar. 30 (SMM) – Lead prices declined recently and average SMM #1 lead price fell to 17,450 yuan per tonne at present from 18,600 yuan per tonne seen early the month, down RMB 1,150/mt. SMM surveys 30 lead industry enterprises on lead price outlook and finds results as follows.
About 83% of surveyed enterprises are negative and 10% expect lead price to be flat at current level, while 7% are cautiously optimistic.
Why most enterprises expect lead price to decline?
Lead Price Falls from Highs and to Keep Dropping on Oversupply, SMM Says
Lead demand will not improve in a short term due to consumption off-season of downstream lead-acid battery market. Moreover, discounts of spot lead widen due to refined lead oversupply. Discounts of lead by pyrometallurgy process increase to RMB 600-800/mt, against average SMM #1 lead price, but trading remains quiet.
Approximately 7% of surveyed enterprises expect lead price to see a reversal as it frequently rumors that lead smelters close down due to environmental protection inspections. SMM learned that some large lead smelters in Anhui, Shandong, Hunan and Henan cut or shut down indeed due to environmental protection inspections and large amounts of small lead smelters close down as it is hard to lock profits with diving lead price.
However, downstream battery producers demand is sluggish despite of slight decline in refined lead supply resulted by output reduction and suspension. So, supply and demand are both poor in China’s market. Lead oversupply will be hard to reverse in a short term with market pessimistic sentiment. SMM expects lead price to remain falling territory.
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