SHANGHAI, Apr 4 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, dipped this week as downstream consumers stockpiled for the upcoming Qingming Festival.
SMM data showed that overall lead social inventories declined over 2,000 mt from last Friday to stand at 39,400 mt as of Thursday April 4, while stocks across Shanghai and Guangdong gained some 100 mt to 8,300 mt.
While US-China trade progress and stronger-than-expected factory activity in China bolstered lead prices on the Shanghai Futures Exchange this week, spot premiums stayed high earlier in the week after lower value-added taxes took effect on Monday.
In the Shanghai physical market, spot premiums rose to 150-200 yuan/mt over the SHFE 1904 contract, from 80-100 yuan/mt on Friday March 29.
This sidelined downstream buyers and resulted in higher inventories across Shanghai and Guangdong.
Sellers lowered spot premiums later in the week, especially in Zhejiang and Jiangsu markets. Domestic lead was offered at premiums of 50-100 yuan/mt over the SHFE 1904 contract as of Thursday April 4.
Lower spot premiums and the imminent holiday prompted lead-acid battery producers to purchase lead, and lowered overall lead social inventories.
Overall social inventories of refined lead are likely to rise next week as smelters maintain production during the holiday. Post-holiday restocking by downstream consumers, however, will cap gains in inventories.
