SHANGHAI, Dec 25 (SMM) – The most-traded SHFE February contract fell past 18,000 yuan/mt, a key psychologically-significant level, on Tuesday December 25 as inventories across China rose from lows.
As consumption began to weaken from October, social inventories of lead expanded. As of Friday December 21, social inventories of lead across Shanghai and Guangdong stood at 21,600 mt and stocks across the country came in at 35,000 mt, the highest since February, SMM data showed.
Tight supplies of battery scrap eased and lessened support at the 18,000 yuan/mt level.
High battery scrap prices, bolstered by supply shortages and high battery prices, kept costs across secondary refined lead smelters at 18,000 yuan/mt in 2018.
Weakening consumption across end-users and narrow profit margins eroded production enthusiasm among secondary lead smelters, which lowered demand for battery scrap and eased the supply tightness.
While battery producers are likely to stockpile raw materials in January, lead prices are expected to remain weak next month as consumption across end-users are unlikely to beat expectations. Trading volumes are set to be thin ahead of the Chinese New Year break.