Lead social inventories edged lower on cautious buying

SHANGHAI, Jan 3 (SMM) – Social inventories of lead ingots in China edged down this week amid holiday-thinned transactions. Downstream consumers were cautious about restocking before the Chinese New Year, and this led to limited weekly changes in lead ingot inventories over the past three weeks. 

SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin fell 300 mt in the week ending January 3 to stand at 45,600 mt, after a buildup of 300 mt in the previous week.

Lead futures extended its decline, with the spot prices dipping below 15,000 yuan/mt to the lowest level since September 30, 2016. Trades thinned in the first half of the week as traders and downstream consumers went for the New Year’s Day holiday. 

Continued decline in lead prices drove downstream buyers to restock after the holiday. Some lead smelters and downstream producers have yet to finalise their long-term contracts for 2020, which also bolstered spot trades. Downstream buyers favoured cheap materials from smelters, rather than picking up cargoes from the social warehouses, and this resulted in a marginal decline in social stocks this week. 

SMM expects stable production at primary lead smelters to cap any decline in social inventories of lead ingot next week, with downstream battery producers restocking moderately before logistics suspension around the Chinese New Year holiday.