Pandemic Kept Dragging Down Lead Prices, Secondary Lead Likely to Be Supported by Cost

SHANGHAI, Aug 24 (SMM) - LME lead moved from the Boll middle rail to the lower rail last week, and the upward trend is under pressure in the short term. However, three-month LME lead hit a new high since 2017 at $208/mt, and the decline in LME lead may slow down this week.

Domestic inventories of lead ingot continued to increase, but the in-plant stocks of primary and secondary lead were low. SHFE lead fell below the break-even point of secondary lead, and some smelters started to reduce production.

SHFE lead is expected to trade above 15,000 yuan/mt. LME lead is expected to move between $2,230-2,315/mt this week, and the most traded SHFE lead contract is expected to move between 15,050-15,500 yuan/mt.

Spot lead prices are expected to stand between 15,050-15,350 yuan/mt this week. Primary lead output may increase steadily amid the lifted production restrictions.

If lead prices continued to fluctuate at low levels, smelters may keep shipping for long-term orders, and some small orders will be offered at premiums. Secondary lead prices fell below the costs, making smelters to reduce production. Small smelters held back shipments, and large smelters mainly shipped for long-term orders.

If lead prices rebound this week, the discounts of secondary refined lead may expand. Otherwise, the discounts will stand flat on the week. Lead-acid battery market is in the traditional peak season, and the consumption by battery companies is rising steadily. The companies were active to purchase at low prices last week, and are likely to maintain the purchase this week.