[SMM Analysis] lead concentrate & waste battery supply is tight. How strong is the rebound in lead prices?

SMM9 March 21: since August 7, Shanghai lead showed an overall downward trend, and then around Wanwu consolidation. Shanghai lead rebounded after a periodic bottom shock on Friday, and today's Shanghai lead 2010 contract continued its rally on Friday, up nearly 2.5 per cent at one point in intraday trading.

In terms of fundamentals:

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On the supply side, in terms of primary lead, the production of the smelter is stable, and the smelter that was overhauled before resumes normal production. In terms of recycled lead, affected by the solid waste law, recycled lead smelting enterprises encounter problems such as difficult inter-provincial transportation and high transportation costs of using hazardous waste vehicles, and the supply of waste batteries is tight; while the production enthusiasm of recycled lead factories is boosted by the expected consumption of reserve stores on National Day, the enthusiasm for purchasing waste batteries is high, the price of waste batteries is easy to rise and difficult to fall, and the high cost of recycled lead gives strong support to the price of lead.

At the mine end, the supply of lead-containing wastes, especially waste lead batteries, to lead production raw materials is reduced, and the demand for lead concentrate is increased, resulting in a tight supply. The processing fee for domestic lead concentrate in some northern regions such as Henan and Inner Mongolia is reduced by 100 yuan per ton.

On the consumer side, lead battery consumption performance is general, electric bicycles and vehicle supporting plate is OK, but the replacement market shows signs of weakening, and according to SMM understanding, some large battery factories have completed the National Day preparation, therefore, lead ingot consumption is mainly rigid demand, manufacturers inventory demand weakens.

Overall, the tight supply of raw materials and the firm cost of recycled lead support lead prices to a certain extent, while lead prices stop falling and stabilize, but the performance of consumers is mediocre, lead prices lack upward power, and the front line pressure of 15400 yuan / ton above lead is relatively high. It is expected that short-term lead prices will still be dominated by range shocks.

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