Lead ingot social inventory across five major regions in China

According to SMM survey, the lead ingot social inventory across five major regions in China totalled 59,100 mt as of May 9, up 5,900 mt from May 29 and 2,800 mt from May 6.

According to the survey, primary lead smelters were undergoing maintenance and output recovery, while most secondary lead enterprises reduced production due to insufficient scrap supply. The supply of lead ingots was limited. After the Labour Day holiday, SHFE lead price has been strong. As of May 9, the SHFE 2406 contract reached a high of 18,135 yuan/mt, setting a new high since July 3, 2018. The price spread between futures contracts and spot cargoes widened. The discounts of delivery brands were 50-250 yuan/mt against SHFE lead prices, and 300-400 yuan/mt for non-delivery brands. The price difference between secondary refined lead and delivery brands lead exceeded 500 yuan/mt. The high lead prices kept downstream companies cautious in purchasing. Most of the purchases were under long-term contracts or secondary lead. As the price spread between futures contracts and spot cargoes widened, sellers were eager to deliver cargoes to warehouses. Some traders even bought high-priced lead for delivery. Therefore, the social inventory of lead ingots increased. The delivery of the SHFE front-month contract will grow social inventories further in the week of May 13.