Primary Lead Smelter Inventory Accumulation: September Smelter Production Adjustments and Maintenance Expectations [SMM Analysis]

According to an SMM survey, as of last Friday (August 23), the in-plant inventory of major primary lead delivery brands was 20,100 mt, an increase of 12,700 mt compared to August 16. On one hand, last week was the final week for August long-term order deliveries, and many smelters mentioned that August long-term orders had been completed and settled, but the new round of long-term orders for September had not yet been shipped, resulting in inventories at smelters not being reduced in time. On the other hand, in late August, the downward shift in lead prices weakened downstream confidence. Additionally, imported lead arriving in the domestic market directly entered downstream enterprises, overdrawing some lead consumption. This made it difficult for primary and secondary lead smelters to sell, with limited total spot transactions.

In the spot market, primary and secondary lead smelters generally sold at large discounts. After the basis widened on Monday (August 26), the spot discounts for branded lead narrowed, and the trade market transactions slightly improved. In September, routine maintenance and production adjustments at primary lead smelters increased. An initial SMM survey on the planned maintenance of smelters in September revealed that medium and large-scale smelters would mainly opt for partial maintenance or slight production reductions, while small and medium-scale smelters would typically choose to suspend production for maintenance to address high inventory issues. The initial survey results are as follows, with actual production changes expected to be continuously monitored and adjusted:

With lead import profits turning from gains to losses, the total import volume of lead ingots in September is expected to decline significantly. Although short-term supply from smelters was ample at the end of August, this is not expected to last long. The maintenance and production cuts of branded lead in September, along with the continuously declining lead ingot delivery inventory, still pose the possibility of a future squeeze. Continued attention is needed on downstream peak season consumption performance and the recovery of export orders.