SHANGHAI, Jan 17 (SMM) – Social inventories of lead ingots in China fell significantly this week as downstream stockpiling before the Chinese New Year holiday continued.
SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin fell 13,500 mt in the week ending January 17 to stand at 29,000 mt, after a decline of 3,000 mt in the previous week.
More companies in the lead industry chain are away for the Chinese New Year holiday, and secondary lead producers suspended operations earlier than other plants.
Lower lead prices at the start of the week drove some downstream lead-acid battery mills to continue stockpiling. Tight supply of secondary lead once boosted prices of secondary refined lead above that of SMM 1# refined lead, by 50 yuan/mt on an ex-work basis. No spot products were available at smelters in Henan and some other areas this week as all their supplies had been ordered via pre-sales amid brisk downstream purchases last week.
In the second half of this week, an influx of cargoes after the delivery of the SHFE January contract and pre-holiday destocking at some traders weighed premiums of spot lead. As of Friday January 17, offers of domestic lead stood flat against the SHFE 2002 lead contract, SMM assessed. Reduced offers further depleted social inventories of refined lead.
SMM expects lead social stocks to limitedly change next week on the back of muted trades as logistics services halt and downstream battery makers exit for holidays.