Lead social inventories continue to grow as supply expands

SHANGHAI, Jul 5 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, continued to grow this week, as demand further weakened after lead-acid battery producers deepened production cuts and as supply expanded after smelters recovered from maintenance.

SMM data showed that lead social inventories across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin rose by over 1,200 mt in the week to Friday July 5, to stand at 35,600 mt.

Greater production drove primary lead smelters to hold quotes in a discount of up to 50 yuan/mt, ex-factory, against the average of SMM 1# lead, while traders, due to cost concerns, offered in a premium of a maximum of 50 yuan/mt over the July lead contract on the Shanghai Futures Exchange.

Higher quotes from traders drove buyers to smelters, resulting in greater social inventories.

Lead social inventories are expected to extend their gains next week, in anticipation of production recovery across primary and secondary lead smelters.