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Tight ore supplies, low stocks to support lead prices
Nov 26,2018 16:33CST
smm insight
Source:SMM
In the past two months, SHFE lead moved in the range of 18,000-19,000 yuan/mt as supply, demand held relatively stable

SHANGHAI, Nov 26 (SMM) – The most liquid SHFE lead contract is likely to see limited downside room in December, with significant support from tight supplies of lead concentrate, high battery scrap prices and low social inventories, SMM believes. Social inventories, at a low in close to six years, provided the most support. 

In the past two months, SHFE lead hovered in the range of 18,000-19,000 yuan/mt as supply and demand held relatively stable.

In December, inclement weather might force northern miners at high altitudes to cut or even suspend production. This, together with the ongoing winter stockpiling across smelters, is set to further tighten supplies of lead concentrate across Chinese markets. SMM learned that concentrate shortages kept some smelters in Hunan from operating at full capacity last week, with the average operating rate across primary lead smelters across the region down 3.3 percentage points in the week through November 23.

Prices of battery scrap are more likely to rise than fall. SMM calculations showed that costs for secondary lead production stood at 18,000-18,200 yuan/mt as of Monday November 26.

Market commentary
Lead

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