Since the return of the May Day holiday, lead prices have risen one after another with an unstoppable upward trend, and as of May 15, they have recorded eight consecutive rises, and have successively refreshed new highs. After refreshing the new high since December 2018 in the previous trading days, the Shanghai lead main market once again rushed to 18,860 yuan/ton on May 15, refreshing the new high of more than 5 years since November 2018. As of the close of the day, Shanghai lead main company rose 2.59% to 18,790 yuan/ton, compared with the closing price of 17,740 yuan/ton on May 6, an increase of 1,050 yuan/ton, an increase of 5.92%.
In terms of spot, according to the SMM spot quotation, as of May 15, the spot price of SMM 1# lead ingot rose to 18,050~18,200 yuan/ton, and the average price was reported at 18,125 yuan/ton, an increase of 1,100 yuan/ton or 6.46% compared with 17,025 yuan/ton on May 6.
As for the reasons for the "non-stop" rise in lead prices, SMM believes that it is mainly supported by the prevailing market bulls, capital favor and fundamentals. Specifically:
Fundamentally, the shortage of lead concentrate supply at the raw material end has lasted for a long time, according to SMM's previous survey, at present, in May, the new planned production capacity of domestic lead and zinc mines has not yet released concentrate products into the market, although the supply of lead concentrate in the second quarter has recovered seasonally, but it is still unable to meet the excess capacity of primary lead smelters. Smelters have reduced crude lead production in April or primary lead enterprises have reduced production, and refined lead production partially recovered in May, but many small and medium-sized smelters still maintained an operating rate of less than 60%.
Therefore, when SMM previously released the output data, it was expected that the output of electrolytic lead in May would continue to decline as the maintenance of primary lead smelters increased and the supply of raw materials such as lead concentrate intensified, and the output of electrolytic lead in May was expected to decline slightly to 287,000 tons.
However, judging from the recent reduction in supply, the situation of recycled lead maintenance and shutdown is significantly better than that of primary lead. In terms of recycled lead, due to the current downstream lead-acid battery market in the off-season of consumption, the demand for battery replacement has declined, and the supply of waste batteries is tight. At the same time, the current price of waste batteries has broken through the 10,000 yuan mark and continues to rise, considering the continuous increase in the cost of waste battery procurement to increase the capital operation pressure of individual refineries, coupled with several large refineries due to equipment failure, environmental protection renewal and other reasons to stop production, SMM is expected to increase the decline in refined lead production in May, and the output of recycled refined lead in May may decline by 31,400 tons to 295,600 tons.
In terms of the price of waste batteries, according to the SMM spot quotation, as of May 15, the spot price of waste electric vehicle batteries has risen to 10,325~10,575 yuan/ton, with an average price of 10,450 yuan/ton, compared with 9,950 yuan/ton on April 30, an increase of 500 yuan/ton, an increase of 5.03%.
At the same time, it should be noted that in the context of continued high lead prices, the profits of recycled lead enterprises have also risen, and if the supply of waste batteries has improved, the lead market may face a slight pressure on accumulation in May.
On the whole, the main logical point of the current high level of lead market operation falls on the shortage of lead concentrate and waste battery supply, which continues to boost lead prices. At the same time, the downstream consumer side also performed well. Although it is still in the off-season of lead-acid battery consumption, according to SMM research, as the lead price continues to rise sharply after May Day, the production cost of the battery pool has risen.
In addition, the Shanghai lead 2405 contract was delivered today, and the holders have successively delivered and moved to the warehouse, coupled with the current situation that the primary lead part of the delivery brand enterprises has not yet reached full production, SMM expects that the accumulation of social warehouses will be smaller, or will be about 10,000 tons.
In terms of waste batteries, the implementation of the "reverse invoicing" policy for waste batteries before, the reduction of short-term recycling volume and the rise in tax costs are also the driving force for the rise in lead prices in the early stage, but it is expected that by June, SMM predicts that as the market gradually digests the impact of the policy, the supply of waste batteries may improve in the future. In contrast, the impact of imports is more worthy of attention, as the import loss continues to narrow, close to June, we need to pay attention to the performance of imports, if the follow-up import window opens, or the formation of a negative factor for lead prices; In the short term, SMM expects lead prices to remain strong.