Post-holiday lead prices fluctuated downward. How is the destocking pace of primary lead smelters? [SMM Analysis]

After the National Day holiday, China's package of monetary policy boosts the commodity market. On the first trading day after the holiday, both domestic and international lead prices jumped initially. However, after the macro benefits faded, they gradually returned to being pressured by fundamentals. How is the destocking pace of primary lead smelters after the holiday?

According to pre-holiday surveys, downstream pre-holiday stocking enthusiasm was low, and the pre-sale volume of primary lead smelters was less than the same period in previous years. The phase-out of lead consumption led to expectations of inventory accumulation at smelters. After the holiday, on one hand, lead ingot inventories from several delivery brand lead smelters were gradually sent to social warehouses during the holiday, resulting in a slight increase in social inventory in the first week after the holiday (Holders Transfer Cargoes to Warehouses, Lead Ingot Social Inventory Accumulation Intensifies [SMM Survey]). Within 1-3 trading days after the holiday, smelters quickly destocked. On the other hand, non-brand lead smelter inventories increased for 3-5 days, with small and medium-sized smelters in Henan and Hunan resuming after September maintenance but not reaching full production. Therefore, post-holiday inventory pressure was manageable, and the weakening lead prices did not lead to panic selling, with some smelters holding back sales in anticipation of price increases.

Additionally, according to the SMM production survey, in October, refined lead producers mainly recovered from maintenance, while downstream consumption slowly increased under the stimulus of consumption policies. Although the automotive battery sector enters its peak season, replacing the electric vehicle replacement sector as the new focus of lead consumption in October, SMM assesses that short-term lead market supply may exceed consumption. Post-holiday lead prices jumped initially and then pulled back, with the first trading day (October 8) seeing a general rise in non-ferrous metals. Market traders actively purchased and restocked in a bullish atmosphere. However, macro disturbances and a subsequent three-day lead price decline caused market traders to adopt a wait-and-see approach, with downstream battery companies primarily purchasing based on immediate needs. Short-term lead prices are under pressure, and market traders are waiting for lead prices to stabilize.