Seasonal lull grows lead social inventories

SHANGHAI, Mar 29 (SMM) – Overall social inventories of refined lead in China, including primary and secondary materials, extended gains this week as traders withheld from offloading cargoes to await lower taxes and as a seasonal lull kept lead-acid batteries cautious about purchasing.

SMM data showed that overall lead social inventories expanded some 900 mt from a week ago to stand at 41,500 mt as of Friday March 29, while stocks across Shanghai and Guangdong dipped some 100 mt to 8,200 mt.

In the spot markets, transactions of cargoes with March or April invoices were heard in the last week before lower value-added taxes take effect.

Traders and smelters remained reluctant to offload cargoes with a March invoice and held offers firm. Their offers were heard in premiums of about 300 yuan/mt over the April contract on the Shanghai Futures Exchange.

Offers for cargoes with an April invoice were mixed, with premiums of 80-200 yuan/mt over the SHFE 1904 contract.

Orders for lead-acid batteries further shrank as a seasonal lull continued. This, together with pessimism about lead prices, kept lead-acid battery producers cautious about purchasing lead and grew social inventories of lead.

Overall social inventories of refined lead are likely to fall next week as traders and smelters would be keen to discharge cargoes after the tax cuts take effect. Continued weakness in demand, however, will limit declines in inventories.