In August, primary lead smelters' raw material inventories slightly accumulated, and lead concentrate TC quotations varied significantly [SMM Analysis]

In the raw material market, based on market surveys, last week, SMM domestic pb50% lead concentrate TC (weekly) quotation was raised to 400-600 yuan/mt, with the highest price up by 100 yuan/mt and the average price up by 50 yuan/mt. SMM imported pb60% lead concentrate TC (weekly) quotation was raised to -$50/dmt to -$20/dmt, with the average price up by $15/dmt.

Last week, the SHFE/LME price ratio gradually stabilized. In the trade market, the mainstream transaction quotation for pb60% lead concentrate TC narrowed to -$40 to -$20/dmt, as the previous quotation of -$100 to -$50/dmt was abandoned by market participants due to the rebound in LME lead prices and the weakening SHFE/LME price ratio. The quotation for lead concentrate TC (containing approximately 500g/t of silver) at ports for domestic trade also saw a slight increase of 50-100 yuan/mt. In July, the import profits of lead concentrate expanded, leading to an increase in the market circulation of imported crude lead and lead concentrate, which gradually arrived at ports. Meanwhile, the continuous decline in battery scrap prices slightly increased the lead-containing scrap inventory in regions such as Henan. In early August, with the increase in lead concentrate and crude lead raw material inventories at primary lead smelters, the tight supply situation of lead concentrate in H1 eased. Smelters in Henan, Jiangxi, Hunan, and Guangxi generally mentioned that the procurement quotations for low-grade lead concentrate were raised by 100-200 yuan/mt.

It is worthy of attention that the domestic lead concentrate TC quotations varied significantly, and the lead concentrate richness and smelters' raw material procurement preferences would affect their pricing intentions. In fact, the TC quotations for lead concentrate rich in copper, zinc, silver, and other precious and rare metals in the market did not show significant changes. Some mines with lead concentrate containing more than 1kg/t of silver or other metals even saw a slight decrease in TC quotations but still managed to successfully bid. For smelters, those mainly procuring domestic lead concentrate or multi-metal rich raw materials did not mention an increase in TC, but smelters primarily focused on lead metal smelting with long-term import contracts and those completing spot order procurement of imported ores tended to quote higher TC in ore trade.