Deepened production curbs extend decline in lead social stocks

SHANGHAI, Sep 27 (SMM) – Social inventories of refined lead in China continued to fall this week, as smelters across major producing hubs such as Hebei, Henan and Anhui provinces were ordered to slash production to combat air pollution.

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin decreased for an eighth week in a row, falling 4,400 mt from a week ago to 19,000 mt as of Friday September 27. The stocks dropped 4,000 mt in the prior week.

Primary and second lead smelters had to cut production by 20-30% after the Beijing-Tianjin-Hebei region and surrounding areas activated a smog-control alert of orange level or above earlier this week.

Lead social inventories were also depleted by pre-holiday stockpiling by downstream consumers, as lead-acid battery producers plan to take a break of only up to three days in the Golden Week holiday.

Stocks are likely to stem their recent declines after the holiday, as production will recover after environmental restrictions are lifted after October 3.