Lead social inventories extended decline as downstream consumers restocked

SHANGHAI, May 8 (SMM) – Social inventories of lead ingots in China fell unexpectedly this week, as smelters maintained normal shipments to consumers during the Labour Day holiday.

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin fell over 300 mt from Thursday April 30 to 8,000 mt as of Friday May 8.

Despite closures of some small and medium-scale lead-acid battery producers, large battery producers in China maintained normal production during the holidays. Smelters did not suspend their deliveries to clients and they do not need to clear inventories after the holidays which was previously expected.

With limited supply from smelters, lead ingot inventories at social warehouses declined after the holidays, as downstream consumers made procurement to replenish their stocks.

In anticipation of the commissioning of several new projects in Anhui and Jiangxi, secondary lead discounts widened further this week. Quotes for secondary refined lead were mostly heard at discounts of 200-150 yuan/mt against SMM 1# lead ingot on an ex-works basis as of Friday May 8, while discounts were as low as 250 yuan/mt for some quotes.

Lead ingot social inventories in China are expected to turn around to edge higher next week, given a pessimistic outlook for downstream consumption.