Smelters Resume Production Amid Weakening Demand, Primary Lead In-Plant Inventory Accumulates [SMM Weekly Review of Primary Lead Inventory]

As of April 25, the in-plant inventory of primary lead delivery brands was 13,300 mt, an increase of 5,300 mt from April 18. This week, maintenance at large primary lead smelters in Henan province concluded, leading to a phased increase in lead supply. Additionally, as it was month-end, the new long-term contracts for lead ingots in May were about to begin, prompting some downstream enterprises to wait for the new contracts, resulting in a decrease in spot order purchases. Lead prices held up well this week, with relatively small price differences across regions, particularly between the major production area of Henan and the consumption areas of Jiangsu, Zhejiang, and Shanghai (ex-factory spot quotations for Henan against the SHFE lead 2505 contract were at a discount of 180-120 yuan/mt, while warehouse quotations in Jiangsu, Zhejiang, and Shanghai were at parity with the SHFE lead 2505 contract, with transportation costs excluded, making the production area prices even higher than the consumption areas). Downstream enterprises preferred to receive goods from nearby social warehouses. Next week, downstream enterprises will enter the Labour Day holiday, leading to a further weakening in lead consumption, which is unfavorable for smelter inventory reduction. Meanwhile, we need to monitor the spread between futures and spot prices. If the spread widens, suppliers may consider transferring inventory to delivery warehouses, potentially alleviating pressure on smelter in-plant inventories.