The regular maintenance season for lead smelting is approaching. How is the maintenance progress for precious metals?

In May, silver production increased by 3.81% MoM, primarily due to the completion of maintenance and resumption of production at smelters in north-west China and east China. However, a lead-zinc smelter in south China experienced a certain impact on precious metal production due to temporary maintenance. Meanwhile, silver production at some copper smelters slightly declined due to a decrease in raw material supply and lower gold and silver content in ores.

Every year from June to August marks the conventional maintenance season for primary lead smelters. Most enterprises will halt equipment operations by mid-June, with production expected to significantly decrease in late June. This round of maintenance is mainly concentrated in south-west China, east China, and north China. After the maintenance, anode slime raw material inventory will gradually decrease, and precious metal production will enter the maintenance phase by month-end June. Therefore, silver production at some manufacturers may slightly decline in June, but the decline in silver production at lead smelters will mainly occur in July.

The supply of spot silver ingots in June will also be in a state of concurrent maintenance and recovery. Considering that other smelters will resume and increase production in June, even if silver production at some manufacturers slightly declines in late June, overall silver production may remain flat or slightly increase compared to May.

Regarding inventory, domestic social inventory of silver ingots continued to decline in May due to increased supply and slowed consumption. The main reason was the expansion of export profits, prompting smelters to increase their export ratios or shift to spot supply in the Hong Kong region, thereby reducing domestic supply. According to the SMM survey, multiple smelters completed price-locking or order signing in May, and silver ingot export demand is expected to persist in June. Therefore, despite reduced operations and further weakened consumption in the domestic downstream silver nitrate sector, the increase in domestic social inventory buildup is expected to be relatively limited.