Supply recovery sharply grows lead social inventories

SHANGHAI, Aug 2 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, significantly grew this week, bolstered by greater arrivals after primary lead smelters in Henan recovered from maintenance.

SMM data showed that lead social inventories across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin increased by some 5,000 mt from a week ago, to stand at 43,300 mt as of Friday August 2.

Lead prices eased this week. Smelters offered deep discounts at the start of the week, with those for primary materials at 150-50 yuan/mt against the average price of SMM 1# and those for secondary materials at 250-150 yuan/mt. The offers were on an ex-factory basis.

Those were more attractive than discounts from traders, which came in at 60-20 yuan/mt for common domestic brands against the SHFE 1908 contract. Downstream consumers turned to smelters for raw materials.

Recent tightness in supplies of secondary lead bullion squeezed profit margins across secondary lead smelters, who will likely further narrow their discounts. This is set to drive downstream buyers to primary materials.

Recovering supplies from primary lead smelters are likely to extend the increase in social inventories next week.