Social inventories of lead ingots rose for ten weeks in a row

SHANGHAI, Jul 17 (SMM) – Social inventories of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin surged as expected this week, rising 11,000 mt from a week ago to 47,700 mt, following the July delivery of the SHFE contract. That marked the tenth consecutive week of increase.

Cargoes flew into social warehouses during the first half of the week, ahead of the delivery day on July 15. SHFE lead prices gave up previous gains in the second half of the week. This grew consumers pessimistic prospects for prices and kept them cautious about restocking. 

Smelters have begun to arrange shipments and this widened discounts of spot products. As of Friday July 17, offers at smelters were at discounts of 100-0 yuan/mt against the average price of SMM 1# lead. This drove buyers away from the traders market, which saw higher prices. 

Lead prices have fallen below 15,000 yuan/mt, driving secondary lead smelters close to losses and narrowing the discounts of secondary refined lead. This may see some downstream demand switching back to primary lead next week. 

Social inventories of lead ingots are expected to further accumulate next week as some smelters in Henan and Yunnan conclude maintenance.