Lead Price to Remain Rangebound This Week, Secondary Lead Prices Supported by Costs

SHANGHAI, Sep 6 (SMM) - European and American markets will focus on Fed’s Beige Book and official statements on economic prospects and monetary policy. In China, August CPI annual rate, trade balance, M2 money supply annual rate, social power consumption annual rate and other economic data will be released soon. China’s pandemic control has been upgraded since August, and some data are expected to stand flat or decline slightly.

China continues to curb the unreasonable price increase of commodities. Bullish and bearish factors mixed on the macro front. LME lead bottomed out for the third consecutive week. Lead stocks across LME-listed warehouses remained downward on the week, but the stocks rebounded 400 mt last Friday, and the spot premiums over three-month LME lead slid to around $106/mt. Export expectations of lead ingots strengthened. LME lead is expected to remain rangebound between $2,245-2,335/mt this week.

Short positions of SHFE 2110 lead contract surged to break through 100,000 lots last week. Then lead prices fell below the break-even point, and secondary lead smelters reduced lead output after holding back cargoes. Shorts gradually closed positions later last week, and SHFE lead rebounded to 15,000 yuan/mt. Social inventories of lead ingots were still increasing, which weighed on lead prices. Secondary lead prices will be supported by costs in the short term as more plants have reduced production. SHFE lead is expected to fluctuate between 14,850-15,150 yuan/mt this week. SMM will monitor the inventory changes.

The spot prices are expected to move between 14,800-15,100 yuan/mt this week. Primary lead smelters will maintain stable production this week, and in-plant stocks will increase slightly. If lead prices stand low, smelters will continue to ship goods mainly for long-term orders. Prices of small orders are high, and the supply varies significantly in north and south China. Secondary lead smelters gradually reduce production amid environmental protection restrictions coupled with losses, while the new capacities are expected to be put into operation. For lead prices rebound, discounts of secondary refined lead may expand. The consumption in lead-acid battery market stood flat, and the companies mainly purchased on rigid demand. SMM will pay attention to the restocking before the National Day holiday.