[SMM Analysis] Macro-level drag on lead prices and inventory decline & tightening of recycled lead supply is a supporting factor

SMM9 March 4: overnight, the three major indexes of US stocks plummeted, the Nasdaq plunged nearly 5%, and the superimposed dollar index rose, non-ferrous metals fell across the board, and Shanghai lead was no exception. Overnight, Shanghai lead 2010 contract fell sharply to 15360 yuan / ton in intraday trading, and then Shanghai lead rebounded to 15480 yuan / ton, down 1.71 percent, as of 14:40 today.

The decline in lead prices is mainly due to the impact of macro factors, lead fundamentals are still relatively optimistic.

In terms of fundamentals, on the supply side, the production of primary lead is relatively stable. At present, recycled lead is the focus of the market. Since September 1, the new solid waste law has been implemented, and the implementation varies greatly among regions. In some areas, the approval procedures are completed quickly, and the purchase of waste batteries is not greatly affected, but the administrative procedures in provinces such as Anhui and Henan are slow, and the transport orders of waste batteries, especially those across provinces, are difficult to obtain, and it is difficult to collect waste batteries in compliance. Some refineries have the problem of shortage of raw materials. Coupled with the decline in lead prices, profits are close to zero, and the willingness of recycled lead refineries to ship goods is low. On the whole, the supply of recycled lead may be tightened.

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On the consumer side, lead battery consumption is stable, and storage enterprises purchase on demand. According to SMM research, many enterprises have the desire to stock up on the National Day, and the social inventory of lead ingots has declined continuously. As of September 4, the social inventory of lead ingots was 31600 tons, down 4700 tons from the week of August 28.

SMM believes that the supply of recycled lead is tightening and the social inventory of lead ingots is falling continuously. Generally speaking, the fundamentals of lead are good, and the short-term decline in lead prices is expected to be limited.

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