Lead social inventories fell as secondary lead discounts narrowed

SHANGHAI, Dec 20 (SMM) – Inventories of lead ingots in China fell this week, after rising for three consecutive weeks as downstream buyers turned to traders after secondary lead smelters narrowed their discounts to zero and limited existing inventories slowed deliveries from primary lead smelters.

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin decreased 1,300 mt in the week ended December 20 to 45,600 mt.

Lead prices dropped below the secondary-lead-cost level earlier this week, prompting secondary lead smelters to scale back their discounts to flat against the average price of SMM 1#lead, and driving downstream buyers back to the spot markets.

Stockpiling ahead of the Chinese New Year holiday and tighter secondary lead supply are expected to pull lead social inventories further lower next week, but the decline will be moderate in anticipation of limited large purchases as large-scale, listed companies are under the pressure of funds returning at the end of the year.