[SMM analysis] what happened when Shanghai lead fell for four days and broke the Wanwu pass?

Published: Jul 17, 2020 16:25 (GMT+8)

SMM7 March 17: affected by the epidemic, California announced the postponement of economic restart, the epidemic situation in the United States is still relatively severe. The recent tension in Sino-US relations has caused market concern, and China's A-share market has experienced a "Black Thursday", with macro sentiment dragging down the trend of lead prices. Today, the 2008 contract of Shanghai lead fell again to 14890 yuan / ton, and as of today it closed at 14925 yuan / ton, a decrease of 1.09 percent.

On the supply side, at present, the production of primary lead enterprises is still stable. As for recycled lead, due to the sharp drop in the price of lead and the high price of waste batteries, the profits of recycled lead enterprises are meagre, there is a sense of reluctance to sell, and the enthusiasm for production may weaken, which may support the price of lead to a certain extent.

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On the consumer side, the purchasing demand for replacement lead ingots downstream is general, which still does not reflect the peak consumption season. The peak season of battery replacement has not yet arrived, especially in the recent rainstorm weather, battery sales have weakened. The current battery inventory is more than a month, mainly digesting inventory in the short term, and the production demand of lead battery enterprises has weakened. In addition, the lower reaches hold a wait-and-see attitude to the future lead price, afraid to fall carefully, according to the data of the previous period, the social inventory of lead ingots has reached more than 40,000 tons this week. Overall, lead fundamentals are still unable to support lead prices, focusing on the support strength of the 20-day moving average in the short term and the price spread in the near and far months.

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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