Regional Supply Tightness Combined with Pre-Holiday Stockpiling Leads to Continued Decline in Lead Ingot Social Inventory [SMM Analysis]

SMM, January 9: According to SMM, as of January 9, the total social inventory of lead ingots in five major regions tracked by SMM stood at 46,000 mt, down by 6,900 mt compared to January 2; down by 2,300 mt compared to January 2. Entering January, the Chinese New Year atmosphere in the lead market has begun to emerge. Considering the suspension of logistics operations during the Chinese New Year period, downstream enterprises have started restocking lead ingots as usual. Particularly after the decline in lead prices, downstream enterprises have shown relatively improved purchasing enthusiasm. Meanwhile, primary lead smelters in regions such as Hunan, Guangdong, and Inner Mongolia are mostly undergoing maintenance, resulting in significant regional supply differences for lead ingots and a wide spot price spread. As of today, quotations for primary lead in Hunan and Jiangxi were at premiums of 200-280 yuan/mt against the SMM 1# lead average price, ex-factory, while spot lead in Jiangsu, Zhejiang, and Shanghai was quoted at premiums of 0-80 yuan/mt against the SHFE 2502 contract, ex-factory. Downstream enterprises preferred sourcing locally and from relatively cheaper supplies, leading to a continued decline in social inventory. Additionally, next week will see the delivery date for the SHFE 2501 contract, which may result in the transfer of delivery warehouse stocks. Meanwhile, the impact of the Chinese New Year on the market will intensify. On one hand, downstream enterprises that start their holidays earlier will begin their breaks next week; on the other hand, long-distance logistics transportation vehicles will gradually decrease, disrupting spot market transactions. Furthermore, suppliers generally plan to clear their inventories before the holiday. Therefore, the inventory buildup of lead ingots in social warehouses during this delivery cycle is expected to be limited.