SMM Survey: Supply Shortage Allows Lead Price to Rise Further

SHANGHAI, Aug. 4 (SMM) – LME lead and SHFE 1709 lead increased constantly recently, and spot lead also registered big growth this past week, with average SMM #1 lead price up 610 yuan per tonne to 18,575 yuan per tonne on August 4.

SMM expects China's spot lead price to keep rising in the coming week with multiple factors, but will meet resistance at 19,000 yuan per tonne.  

In addition to a weak US dollar, tight supply in lead market will also trigger the price hike.

Downstream Demand Dominates Lead Price, Not Environmental Checks, SMM Reports

Lead concentrate supply is tight due to environmental factor and lower ore grade, refraining production at primary lead smelters. Those smelters mainly supply goods for term contracts. Moreover, all small secondary lead smelters close down in response to environmental checks, especially in Henan and Shandong. Output at large secondary lead smelters is restricted by high temperature and supply shortage of crude lead. Those, tighten secondary lead supply.

On the demand front, battery producers cut output amid poor end-user demand and high temperature, but current operating rates are higher than levels seen in January-May.

Motive Battery Price May Rise on Continuous Growth in Lead Price, SMM Reports

Many primary lead smelters in Yunnan are notified to cut and halt output as air condition fails to meet standards, and environmental checks on secondary lead smelters in Jiangsu and Jiangxi are stricter. Motive and ignition battery distributors in face of surging lead price have started stock replenishment, improving orders at some battery producers. This, coupled with anticipation of peak season in August, will hold operating rate at 70-80% at large battery producers.

However, large primary lead smelters in Henan and Yunnan will resume operation to normal level after unit maintenance and the end of output restriction.

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