Lead spot prices to remain weak on slow demand, output recovery

SHANGHAI, Apr 23 (SMM) – Lead prices in China’s spot market are likely to remain weak as downstream demand in the lead-acid battery market remains weak and as production recovers across primary lead smelters, SMM believes.

With weak fundamentals, spot lead prices saw a wider trading range in April as supply and demand changed and as there was much volatility from macroeconomic developments. SMM assessed 1# lead at 18,450 yuan/mt as of Friday April 20, down 325 yuan/mt from the end of March.

As maintenance works across primary lead smelters are completed by the end of April, production is expected to recover 25,000-30,000 mt from May. The downstream lead-acid battery market will continue its low season in April and May. Lead-acid battery plants produced on sales and promoted their finished battery products. Inventories of lead-acid batteries grew as downstream consumption was slow.

Current low social inventories are likely to provide some support to lead prices. As of Friday April 20, overall social inventories stood at about 30,000 mt.

Price spreads between primary and secondary refined lead narrowed as supplies of secondary lead shank. Rectification at the secondary lead industrial park in Taihe, Anhui province and environmental restrictions in Jiangxi and Jiangsu provinces continued. As prices of waste batteries stayed at high levels, profits across secondary lead smelters fell and neared losses. Some small smelters were not keen to resume production after suspension for environmental checks. Spot secondary lead prices were heard at discounts of 100-150 yuan/mt, including a transport fee, against SMM1# lead as of Friday April 20. We expect price spreads to narrow further.

For editorial queries, please contact Daisy Tseng at daisy@smm.cn 
For more information on how to access our research reports, please email service.en@smm.cn