Lead social stocks extended gains amid weak demand

SHANGHAI, Jun 19 (SMM) – Social inventories of lead ingots in China continued to grow this week, as demand faltered further with a pessimistic outlook and a rally in lead prices keeping lead-acid battery producers cautious about procurement.

Downstream buyers, on the other hand, preferred to buy from smelters whose quotes were more attractive than those from traders.

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin increased 4,000 mt in the week ended June 19 to 28,600 mt, after a build of 10,100 mt in the previous week.

With costs underpinned by continued tightness in battery scrap supply, secondary lead smelters offered their refined products at discounts of up to 100 yuan/mt, ex-works, against SMM 1# prices, narrowing from up to 200 yuan/mt at the start of the week.

Quotes from smelters, meanwhile, flipped into premiums, and the premiums stood at up to 50 yuan/mt over SMM 1# prices as of Friday, while quotes for cargoes under warrants from traders were in premiums of up to 50 yuan/mt over the July contract on the Shanghai Futures Exchange.

With little change to operations at primary and secondary lead smelters, lead social inventories in China are likely to continue to rise next week as downstream consumers will remain cautious about lead procurement in anticipation of the arrival of the mid-year. The uptrend, however, will be slower given low inventories at smelters.