SHANGHAI, Oct 12 (SMM) - Base metals saw broad-based decline in today’s morning session under the influence of the macro bearish atmosphere caused by growing geopolitical risks and expectations for high inflation, which lifted the US dollar index further. However, SHFE lead managed to close up 0.13% as of noon thanks to positive fundamentals.
In terms of inventory, LME lead inventories continued to run at a low level. In early October, after the news that Nyrstar's Port Pirie lead smelter in Australia would be closed for 55 days, the output of the Hai smelter decreased or increased, LME lead prices rose for days. The pre-holiday stocking at the end of September allowed the inventory of smelters to transfer to the downstream battery enterprises. Under the support of high operating rates of lead-acid battery makers, the domestic lead ingot social inventory did not accumulate after the National Day holiday.
Many parts of China saw pandemic outbreak before and after the National Day holiday. Due to pandemic control in Hunan’s Shuikoushan and Yunnan’s Gejiu, the transportation of primary lead was severely affected. The Shuikoushan area in Hunan lifted COVID lockdown yesterday, allowing the transportation of lead ingots to gradually return to normal. The operating rate of primary lead smelters in Yunnan will decline this week. The annual production capacity of primary lead in operation in Yunnan Province totals 440,000 mt. One primary lead smelter has entered routine maintenance. As such, the supply of primary lead in Yunnan Province in October is expected to fall by more than 5,000 mt when compared with September. The main consumption areas of lead ingots have not been affected by the pandemic control.
In the spot market, the lead price after the holiday rose by nearly 200 yuan/mt as compared with the last trading day before the holiday. After the lead price stabilized, trades in spot market turned active. The market shall keep a close eye on inventory changes before futures delivery, as well as how the pandemic will affect lead smelters in major producing areas.
