SHANGHAI, Aug 16 (SMM) - Yesterday, the non-ferrous metal market generally fell in the context of a higher dollar and a number of domestic macro data that were less than expected. SHFE lead hit an intraday low of 14,985 yuan/mt, hitting a new low since July 20, a drop of 2.09%.

The average price of SMM 1# lead ingot was 15,000 yuan/mt as of August 15, a daily drop of 1.15%.

As for the reasons for the sharp drop in lead prices yesterday, SMM believes that the decline was caused by the bearish macro environment and rising social inventory. Since August 5, the social inventory of lead ingots in China’s five major regions has been rising. According to the latest survey data of SMM, as of August 15, the total social inventory in China’s five major regions was 75,300 mt, an increase of 13,500 mt or 21.84% from the low of 61,800 mt on August 5.

In addition, with the production recovery of primary lead smelters from maintenance and the release of new secondary lead production capacity, the supply of lead ingots is expected to increase. Although there have been frequent power rationing policies in various places recently, and the supply of secondary refined lead in Anhui has declined slightly, SMM expects that the overall supply will still increase in August. On the other hand, it is currently in the peak season of lead-acid battery consumption, and the operating rate of lead-acid battery enterprises remains high. With the gradual narrowing of the SHFE/LME lead price ratio, lead ingot export window may open, which will boost lead prices.

With the digestion of negative macro factors and under the support of costs, it is expected that lead prices will see limited downside room.