Social inventory of lead ingots rises to a three-month high, with supply tightening possibly alleviating subsequent inventory buildup pressure [SMM Social Inventory of Lead Ingots]

        SMM News on July 17: According to SMM, as of July 17, the total social inventory of lead ingots across five regions tracked by SMM reached 69,000 mt, an increase of 7,900 mt from July 10 and 5,600 mt from July 14.

        This week, the SHFE lead 2507 contract completed its delivery. The transfer of lead ingot inventory due to cargo pick-up at delivery warehouses continued the upward trend in social warehouse inventory of lead ingots, with varying degrees of increase across all five regions, primarily in warehouses in Jiangsu, Zhejiang, and Shanghai. Recently, lead prices have been in the doldrums, and the enthusiasm for shipping among primary lead and secondary lead smelters has declined. Additionally, production cuts due to maintenance at some smelters have led to a tightening of regional lead ingot supply. For example, the situation of queues for picking up goods at smelters in Henan province has persisted from last week to this week. This week, the spread between futures and spot prices of lead has narrowed day by day. The discount of electrolytic lead quotations in Henan, the main producing area, against the SHFE lead 2508 contract has narrowed from a discount of 200 yuan/mt last week to a discount of 100 yuan/mt at factory gate. Furthermore, the decline in lead prices has led to a further expansion of losses for secondary lead enterprises, dampening the enthusiasm for shipping and production among smelters. Some enterprises have either suspended shipping or refused to budge on prices, with secondary refined lead quotations at a premium of 0-100 yuan/mt against the SMM #1 lead price at factory gate. With the completion of SHFE lead delivery and the narrowing of the spread between futures and spot prices, the movement of inventory by suppliers will be suspended. It is expected that the growth in social inventory of lead ingots will slow down. If the supply of lead ingots in Henan province does not recover next week, downstream rigid demand may turn to consume social warehouse inventory.