SHANGHAI, May 17 (SMM)—Social inventory of lead ingots increased by about 20,000 mt to 87,400 mt last week as smelters were willing to deliver goods with the approaching of settlement day. The inventory reach a new high since 2018, bring high pressure to the supply side. The inventories of finished products at battery plants kept rising as the delivery sources flowed out, and consumption was quiet in the off season. Downstream users may purchase at low prices. Primary lead smelts made profits mainly on the byproducts as the TCs kept falling. Jinli was in maintenance, but the output was little affected. Henan Yuguang resumed production and the overall output increased. Smelters are expected to be more willing to deliver cargoes this week. Secondary lead output went up steadily in May, and the prices of lead-acid battery scrap rose amid the short supply of raw materials, so the companies were basically break-even. The price spread between primary and secondary lead is expected to remain between 200-300 yuan/mt if the secondary lead prices keep rising this week.
Raw material supply was tight, but lead prices will not be lifted unless the production is reduced. The overall upward room for lead prices is limited amid high inventories and production at smelters and the off season of consumption. The US core CPI economic data exceeded expectations last week, and the market once again heard news of an early interest rate hike. The domestic M2 fell short of expectations, and National Development and Reform Commission continued to be bearish over commodities. Therefore, LME lead weakened. However, the US unemployment rate was still low, and the interest rate is unlikely to rise if US economy is not fully recovered. Nonferrous metals are likely to remain in inflation, and commodities may rise further. This week, LME lead is expected to move between $2,100-2,190/mt, and the most traded lead futures contract is expected to move between 14,800-15,200 yuan/mt.