SHANGHAI, Apr 19 (SMM) – Shanghai lead prices are likely to receive a boost from a peak season for maintenance across smelters in May, SMM believes.

The most active lead contract on the Shanghai Futures Exchange rose for a second straight trading day on Monday, climbing 0.6% on the day to close at 16,575 yuan/mt.

The spread between the May and June contracts flipped into a narrow backwardation structure. Institutional traders were keen to cover their short position when prices fell to the 16,500 yuan/mt level. Those factors pointed to market concerns about supply with a slew of smelters beginning maintenance in May.

Those smelters include Hechi Nanfang in Guangxi, Jingui Silver in Hunan, Chifengshan Gold, Silver & Lead in Inner Mongolia, Jiangxi Copper and West Mining.

About 30,000-35,000 mt of production of primary lead is expected to be impacted if smelters undertake maintenance as planned.

With Chihong Zinc & Germanium and Anhui Tongguan recovering from maintenance, production of primary lead in China is expected to shrink 25,000-30,000 mt in May.

Pessimistic fundamentals have kept Shanghai lead prices under pressure since 2019. China’s new standards for electric bikes, which will likely weigh on demand for lead-acid batteries, a major consumer of lead. Lead prices also faced pressure from high operating rates across smelters, given high ore processing fees.