[SMM Analysis] lead Ingot inventory ends Ten consecutive increases & long-term consumption can lead prices are too strong in the short term

SMM7 March 27: macro sentiment tends to pick up, but we still need to pay attention to the development of trade between China and the United States, stimulated by the continued decline of the dollar index and the total number of new home sales in the United States in June and manufacturing data in July. Macro positive led to a rise in non-ferrous metal prices, of which Shanghai lead 2009 contract once rushed to 15250 yuan / ton, as of noon today closed at 15190 yuan / ton, an increase of 1.74%.

According to SMM's analysis, the rise in lead prices is mainly due to:

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On the one hand, due to rainstorm weather or stricter transport control, it is difficult to collect waste batteries, and the production of some recycled lead smelters has been affected, coupled with the low price of recycled lead, refineries are in short supply of recycled lead; on the other hand, due to the tight supply of waste batteries, prices are firm, and the cost of recycled lead remains high, so recycled lead smelters ship at high prices, and the price advantage weakens. To sum up, downstream procurement demand returned to primary lead, coupled with the overall improvement in consumption downstream of lead ingots, leading to a decline in lead ingot inventory. As of July 24, according to SMM research, the social inventory of lead ingots was 42000 tons, down 5700 tons from the previous week on July 17, ending 10 consecutive increases.

In addition, due to the gradual resumption of the economy overseas, lead battery export orders have picked up, while domestic car battery replacement demand has improved, the downstream pick-up mood is better, the future lead battery consumption season is expected.

SMM believes that the current cost of recycled lead supports superimposed consumption expectations, and lead fundamentals have a certain degree of support, but the battery replacement season has not arrived after all, and lead prices are expected to remain volatile before the peak season.

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