SHANGHAI, Mar 28 (SMM) - This week, the United States will release March ADP employment data, unemployment rate and seasonally-adjusted non-farm payrolls data, while China will release March manufacturing PMI, most of which are expected to be positive. It is still vital to closely watch how the energy crisis under the influence of Russia-Ukraine war will affect the costs and production of non-ferrous metals producers.
In the context of tight overseas energy supply, LME lead inventories have remained low. Tight supply and rising costs will support the upward trend of LME lead prices, which are expected to move between $2,285-2,395/mt this week.
The number of confirmed COVID cases in China surged, with Shanghai being one of the regions that were hard hit by the pandemic. This restricted the transportation of lead-acid battery scrap, lead ingots and lead-acid batteries. Secondary lead smelters were forced to reduce their production due to difficulties in purchasing battery scrap, while battery companies chose to purchase from nearby regions. The social inventory of lead ingots in major consumption areas dropped sharply. As such, most-traded SHFE lead contract is likely to climb further to 15,200-15,600 yuan/mt this week.
Spot lead prices are expected to trade between 15,200-15,450 yuan/mt this week.
In terms of secondary lead, the pandemic-induced transportation restrictions have resulted in raw material shortages at secondary lead smelters, forcing some of them to reduce their output. Low inventory will encourage smelters to hold their offers firm this week.
In terms of primary lead, its supply was relatively ample. However, the overall lead supply declined due to falling supply of secondary lead. Primary lead smelters are expected to quote their prices the same as the SMM refined lead average price.
On the downstream side, the lead-acid battery market has entered the traditional off-season, prompting some lead-acid battery companies to reduce their production. However, the short-term output cuts will be limited in relation to the total supply.
