SHANGHAI, Jun. 21 (SMM) – Lead price grew successively from late May, with SMM #1 average lead price up by 2,000 yuan per tonne to 17,625 yuan per tonne from the lowest level at 15,550 yuan per tonne in the first half of 2017.
Lead supply shortage is the main driver behind the price growth. Output at primary and secondary lead smelters reduces sharply due to environmental protection inspections and maintenance. Moreover, motive battery producers expand output as end-user demand improves, increasing lead demand markedly. Those tighten lead supply, shoring up lead price.
However, the price may not remain firm growth in July in face of rising supply and uncertainties over operating rate at battery producers in June, SMM expects.
SMM survey finds that secondary lead smelters in Anhui have resumed production last weekend after the end of environmental checks. Some primary lead smelters in Henan, Guangxi and Inner Mongolia will finish maintenance before June 25. Lead smelters in Yunnan’s Gejiu, shutting down for blast furnace rectification previously, plan to conduct trail production in July after meeting environmental standards.
Meanwhile, market participants show pessimistic outlook on lead demand. Distributors in motive and ignition battery market are active in building stocks in response to continuous rises in lead and battery prices. Some battery producers even report insufficient finished goods inventories. But, end-user demand remains sluggish, and inventory at battery producers is only shifted to distributors. So, it is uncertain that if orders at battery producers will keep brisk in July.
In addition, some battery producers will launch maintenance in July-August by tradition, which will last for half a month. Large producers, which are active in production for semi-annual output and sales targets in June, may reduce production enthusiasm after July.
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