SHANGHAI, Jul 26 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, declined this week, as robust lead prices and upbeat lead-acid battery consumption improved purchasing interest among downstream consumers.
Larger discounts from traders and smaller discounts from secondary lead smelters, meanwhile, drove buyers to purchase from spot markets, which also helped lower lead social inventories.
SMM data showed that lead social inventories across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin decreased by over 1,000 mt from a week ago, to stand at 38,300 mt as of Friday July 26.
Downstream consumers preferred to buy from smelters at the start of week, before they were attracted by larger discounts from traders.
Primary lead smelters at the start of the week maintained a discount of 150-50 yuan/mt against the average of SMM 1# price assessments. Traders later in the week widened their discounts, with those for common brands standing at 70-20 yuan/mt in Zhejiang and Jiangsu against the August contract on the Shanghai Futures Exchange and at 150-100 yuan/mt in Tianjin.
Meanwhile, secondary lead smelters narrowed their discounts from the start of the week, as environmental restrictions limited production at small smelters in some regions. Secondary refined lead was quoted in a discount of 250-150 yuan/mt against the average of SMM 1# as of July 26.
While consumption is expected to pick up, social inventories of lead ingots are unlikely to fall sharply as smelters in Henan will recover from maintenance next week.