News from SMM5 on the 14th of July
Since 2019, the price of lead has been falling continuously. Recently, due to the deterioration of the trade situation between China and the United States, the market risk preference has plummeted, and lead has been suppressed by short sellers. By the end of this afternoon, SHFE lead fell 5.04% in May. LME lead fell 8.26 per cent in May.
First of all, reviewing why funds give priority to lead as an empty product, SMM believes that the logic of market emptiness lies in the impact on consumption caused by the implementation of the new national standard for electric vehicles in the off-season, while the US tax on 200 billion of goods in China has recently been raised from 10 per cent to 25 per cent. Among them, lead-acid batteries are in the collection of commodities (Chinese battery exports to the United States account for 16% to 18% of the total lead battery exports). Therefore, it is not difficult to find that the double crackdown on consumption at home and abroad makes the market extremely pessimistic about the consumption expectations of the lead market. In the case of pessimistic fundamental expectations, lead technology is in short arrangement, macro and in turmoil, a number of factors superimposed, lead priority to attract short capital allocation.
Where is the dawn of the rebound in the "falling" price of lead
On the supply side, we only need to judge the change of production profit and the price difference of regeneration primary. As shown in the chart, the profit situation of recycled refined lead and the price difference of regeneration primary can be seen through the historical data of nearly 2 to 3 years. When there is a substantial loss of recycled lead, the lead price will show signs of stopping and stabilizing, and the price reversal is due to a significant decline in inventory under the reduction of the renewable supply side, so the price judgment in the future, It is to judge whether the inventory can be effectively removed on the premise that the original price difference of regeneration is narrowed to flat water or even upside down.
As of today, the average price of electric waste battery is 9200 yuan per ton, and the production loss per ton of recycled lead plant has expanded to 500 yuan. The mainstream quotation of recycled lead market is 50 yuan per ton of SMM1# lead discount, and some of them are quoted for SMM1# lead flat water. Two signs that prices have stopped falling and stabilized have emerged. In terms of primary lead, in mid-May, gold and silver lead in the south of Hechi and Chifeng Mountain entered and overhauled one after another, so from the supply side of lead ingots, we can see that the output of lead ingots is expected to decrease. On the other hand, due to the continued weakness of lead prices in the downstream storage enterprises, the purchasing mood has been depressed recently. If the price stops falling and stabilizes, the downstream dealers may transfer the finished product inventory of some battery plants (by the end of April, the finished product inventory of dealers is about 18 days). In addition, some large storage enterprises have the expectation of half-year report, the domestic downstream consumption expectation gradually warms up. Combined with both ends of supply and demand, we only need to judge the changes in the social inventory of lead ingots. We expect the inventory to increase first and then decline, because recently, due to the extremely low consumption, the inventory of several large refineries in Henan has increased, and there are signs of gradual transfer to delivery inventory. Therefore, it is expected that the social inventory of lead ingots may rise slowly in the past two weeks, but in late May and early June, we expect the problem of refinery maintenance and regeneration profits to be gradually reflected in the destocalization of stocks.
Combined with all the above, we believe that from late May to June, lead prices may gradually get out of the downturn and enter the process of low and rising.