SHANGHAI, Jun 24 (SMM) – Social inventories of lead ingots in China continued to grow ahead of the Dragon Boat Festival holiday, as downstream consumers were cautious about pre-holiday stockpiling around the middle of the year.
Wider discounts for secondary lead offered by smelters, meanwhile, diverted some buyers from the trading market, especially cargoes under warrants, and helped lifted social inventories.
SMM data showed that lead social stocks across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin increased 1,100 mt from last Friday June 19 to 29,700 mt as of Wednesday June 24, after a build of 4,000 mt in the previous week.
Secondary lead smelters deepened their discounts after their margins improved on the back of a rally in lead prices, and the discounts for secondary refined materials stood at 150-100 yuan/mt against the SMM1# lead price, ex-works, as of Wednesday.
Lead social inventories in China are likely to continue to trend higher moderately next week as some downstream consumers will take a break for up to three days while smelters will maintain normal operations.
Smelters are rushing to fulfill long-term contracts while lead-acid battery producers remain cautious about procurement, as upstream and downstream companies are keen to recoup funds ahead of the middle of the year.
