SHANGHAI, Dec 3 (SMM) – While a potential truce in the US-China trade war buoyed the SHFE 1901 contract to break pressure at 18,500 yuan/mt on Monday December 3, a domestic supply glut is likely to limit its upward momentum this month, SMM believes.
SHFE base metals increased across the board on Monday after news that US President Donald Trump and Chinese President Xi Jinping agreed to withhold further tariffs on each other's countries for 90 days.
Resumption after maintenance is estimated to recover lead production by 15,000-16,000 mt in December. These include some 5,000-6,000 mt of primary lead, from resumed production across smelters in Henan and Yunnan provinces. Some secondary smelters in Shandong and Jiangsu provinces will also end maintenance this month, and this will increase output of secondary refined lead by nearly 10,000 mt.
Downstream lead-acid battery industry remains in slack season in December. While some specifications were out of stock at some large battery plants, they received few orders for delivery in the second half of December. Most backlogged orders for lower-grade batteries had been fulfilled by the end of November, SMM learned.
Improved imports earnings are expected to grow the inflow of foreign lead products into domestic market in the near run. This will further weigh on prices of SHFE lead contracts.