Lead social inventories edged higher on year-end slower trades

SHANGHAI, Dec 27 (SMM) – Inventories of lead ingots in China rose this week as downstream buying demand slowed at year-end. 

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin climbed 300 mt in the week ended December 27 to stand at 45,900 mt. The stocks ended three consecutive weeks of increase with a decline of 1,300 mt last week. 

Shanghai lead futures recovered from low levels this week. While weak lead prices close to 15,000 yuan/mt supported purchases and triggered pre-sales in the spot market at the start of the week, rising lead prices and high premiums sidelined downstream battery producers in the second half of the week. The year-end financial settlement at large enterprises also resulted in thin spot trades and higher social inventories. 

As of December 27, quotes of spot lead stood at premiums of 250-300 yuan/mt over the SHFE January lead contract, SMM assessed. 

SMM expects social inventories of refined lead to limitedly change next week on the back of weaker demand and supply. Lead procurement will likely fall as some battery producers planned to take a break on the New Year's Day.

Intensified pollution alert in Henan, meanwhile, will continue to restrict production and delivery at primary and secondary lead smelters.