SHFE Lead Outperformed LME Lead amid Sound Demand among Others

SHANGHAI, Dec 9 (SMM) - The moves of SHFE and LME have been heading toward different directions recently. As of December 8, LME lead has been falling for five consecutive sessions. SHFE lead, on the other hand, rallied strongly after falling for two days in a row, and rose 1.88% to 15,175 yuan/mt to close the day.

Spot market basically shadowed the futures moves. According to SMM, the average price of SMM #1 lead recorded 15,050 yuan/mt, up 1.35% from last trading day as of December 8.

In terms of LME market, though LME lead inventory has been dropping recently, which underpinned lead prices, the repeating COVID pandemic, uncertainties that haunted economic development as well as less-than-expected consumption have collectively weighed on LME lead.

In China market, SHFE lead inventory was declining as well. According to SHFE, the warrants have been dropping in the last few days, indicating that lead inventory is likely to shrink further in the near future. SMM will disclose the latest social inventory of lead ingot on December 10.

On the other hand, lead-acid battery scrap supply was tight, which resulted in relatively high prices; hence the profits of secondary lead thinned. Secondary lead smelters were more inclined to hold the prices firm, leading to narrowing discounts of secondary lead. Meanwhile, sound export orders and optimistic outlook are both favourable to the market.

In the demand side, the production of downstream companies has been stable, and most would purchase on dips when lead prices fell. Spot market was robust as a whole.

To sum up, SMM believes that the encouraging export readings, falling lead ingot inventory and sounder consumption compared with overseas market have support SHFE lead prices, which outperformed LME lead.