SHFE Lead Hit Two-Month High amid Positive Fundamentals

SHANGHAI, Oct 14 (SMM) - Since September 28, SHFE lead has shown an upward trend. SHFE lead once jumped to a high of 15,365 yuan/mt yesterday, setting a new high since August 10. 

The average spot price of SMM 1# lead ingot was 15,125 yuan/mt yesterday, an increase of 325 yuan/mt or 2.2% from September 28.

According to the latest September production data from SMM, the domestic refined lead production in September was 295,100 mt, an increase of 9.97% from the previous month and a year-on-year increase of 12.3%. The monthly output reached a new high since September 2017. However, in October, considering that some enterprises have entered a state of maintenance, coupled with the pandemic in Hunan, Inner Mongolia and other regions that hampered local transportation, as well as power rationing in the dry season in Honghe prefecture, Yunnan, lead output will be disrupted.  SMM estimates that the domestic refined lead output will fall from September to 288,400 mt this month.

According to SMM data, as of October 10, the total social inventory of lead ingots in China’s five major regions was 66,000 mt, which was relatively low in recent years, and also provided a certain upward momentum for lead prices. 

On the downstream consumer side, the orders of major lead-acid battery enterprises have increased steadily since mid-to-late September with arrival of the peak season. In particular, producers of lead-acid battery used in e-bikes have run at full capacity due to robust orders.  As of September 30, the lead-acid battery operating rate reached 80.68%, setting a record high for more than three years. 

Under the support of many favorable factors such as anticipation of lower production, relatively low inventories, and high downstream operating rates, lead prices went up. SMM believes that strong fundamentals will keep the short-term lead price at highs.