Lead social stocks rebound on poor consumption, greater secondary supply

SHANGHAI, Jun 14 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, rebounded this week as poor downstream consumption and high in-plant stocks of finished products weakened procurement by lead-acid battery producers. 

SMM data showed that lead social inventories rose by almost 1,000 mt in the week to Friday June 14, to stand at 35,200 mt. However, stocks across Shanghai and Guangdong shrank from the previous week to 8,600 mt as of June 14. 

A greater supply of secondary lead, driven by recovery from environmental cutbacks and greater new capacity, significantly expanded discounts of secondary refined lead. This drove downstream consumers to secondary materials. 

As of Friday June 14, prices of secondary refined lead stood at a discount of 150-100 yuan/mt against the average price of SMM #1 lead, with a deepest discount of 200 yuan/mt this week. 

Some primary lead smelters continued to produce during the Dragon Boat Festival holiday, and this also contributed to the higher social inventories of lead ingot, despite continued maintenance across some primary smelters. 

The prospects of lingering weak consumption, stable supply of secondary lead, and larger-scale maintenance across primary smelters are likely to keep lead social inventories little changed next week.