SHANGHAI, Apr 19 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, dipped this week as thin profits prompted most small secondary lead smelters to cut, or suspend production.
SMM data showed that overall lead social inventories declined some over 600 mt from a week ago to stand at 37,000 mt as of Friday April 19, with stocks across Shanghai and Guangdong shrinking some 300 mt to 7,900 mt.
Lower production of secondary lead drove up prices of such materials above prices of primary lead at one point, with secondary lead spreads standing at a discount of 50 yuan/mt, ex-factory, against the average of SMM 1# lead as of Friday April 19. This lowered the appeal of secondary lead and drove buyers to primary materials.
Meanwhile, sellers in the spot markets slashed their offers as supplies grew after delivery. Common brand domestic lead was offered at a premium of 50-100 yuan/mt over the May contract on the Shanghai Futures Exchange as of Friday.
For downstream buyers, weaker demand in a low season kept lead-acid battery producers cautious about purchasing lead, even as risk aversion eased on the stabilisation of lead prices after sharp declines at the start of the week.
Battery producers will further scale back operations as a seasonal lull continues. This, together with stable production at lead smelters, will likely grow social inventories of lead next week.
