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[SMM analysis] inventory increases sharply, lead prices fluctuate, supply loosens and consumption drags down inventories will still increase.
Jul 20,2020 15:35CST
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Source:SMM
The content below was translated by Tencent automatically for reference.

SMM7 March 20: since May 8, the social inventory of lead ingots has opened the accumulation model. As of July 17, the total inventory of lead ingots in the five places of SMM reached 47700 tons, an increase of 29900 tons compared with May 8. Lead prices have erased a wave of gains since July 7 under the pressure of a receding stock boom and rising stocks of lead ingots.

SMM believes that the rise in social inventory of lead ingots is mainly due to the following two aspects:

On the one hand, the production of primary lead enterprises has been stable since May. According to SMM research, primary lead production in June was 269000 tons, up 1.58% from the previous month and 22.3% from the same period last year. Cumulative output rose 1.23% in the first half of 2020 compared with the same period last year. As for recycled lead, the newly expanded capacity has been released continuously since the second quarter, and the output of recycled lead smelters has increased steadily. Overall, the supply of lead tends to be loose.

On the other hand, since the outbreak of the epidemic, lead battery consumption has not been outstanding for the time being, and it has not yet entered the peak season of battery replacement. Lead battery enterprises mainly digest inventory and only need to purchase lead ingots downstream. However, due to the drag of the overseas epidemic, export orders did not improve significantly.

SMM believes that at present, due to the decline in lead prices, and waste battery prices remain high, recycled lead smelters maintain a capital preservation state, recycled refined lead stickers have shrunk, refineries show cherished sales sentiment, some just need to return to the primary lead, but the primary lead enterprises are overhauled and returned to normal production, and downstream consumption is afraid of falling cautiously, it is expected that the social inventory of lead ingots will continue to rise this week.

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