The Decline in Lead Ingot Social Inventory Slows Down, Attention to Contract Delivery [SMM Survey]

According to an SMM survey, as of December 5, SMM lead ingot social inventory in five regions reached 57,000 mt, a decrease of over 900 mt compared to November 28, and an increase of less than 100 mt compared to December 2.

According to the survey, lead prices have shown strong performance recently, with the most-traded SHFE lead contract reaching a high of 17,760 yuan/mt. Suppliers have become significantly more active in shipping, and the spread between futures and spot prices has further widened. As of December 5, quotations for warehouse resources in Jiangsu, Zhejiang, and Shanghai were at a discount of 50-30 yuan/mt against the SHFE 2501 contract; quotes for primary lead in mainstream production areas were at a discount of 250-200 yuan/mt against the SHFE 2501 contract ex-factory, with a few as low as a discount of 300 yuan/mt. Meanwhile, secondary lead smelters have gradually resumed production, and the discount for secondary refined lead has widened, with ex-factory discounts ranging from 200 yuan/mt to 0 yuan/mt against the SMM 1# lead average price. Downstream enterprises are cautious in purchasing, with some just-in-time needs leaning towards secondary lead. The decline in lead ingot social inventory has slowed, and there is a risk of accumulation. Next week is the week before the delivery of the SHFE 2412 contract, and the significant spread between futures and spot prices has increased suppliers' willingness to deliver. As the delivery date approaches, we need to pay more attention to the impact of contract delivery on social inventory.