Lead social stocks rose significantly amid import arrivals

SHANGHAI, May 29 (SMM) – Social inventories of lead ingots in China expanded significantly this week, mostly driven by arrivals of seaborne lead. 

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin rose more than 2,000 mt in the week ended May 29 to 11,600 mt, after a build of over 100 mt in the previous week.

A rally in lead futures at the start of the week prompted smelters and traders to destock at lower offers, with discounts at smelters (as compared with the average prices of SMM #1 lead) deepening and premiums at traders (against the SHFE June contract) also falling. However, pessimistic prospects for prices kept downstream consumers from purchasing. Large-scale downstream mills mostly purchased under long-term contracts or procured primary lead and secondary lead from smelters, whose prices were cheaper than that in the trading market. This accounted for the build of inventories at social warehouses this week.

SMM learned that there will be more seaborne lead cargoes entering China in June, and the amounts of arrival will determine whether the domestic lead ingot inventories would continue their increase next month.