Lead Prices Surge - Shanghai Lead Hits Over Two-Month High

During trading on March 28th, Shanghai lead prices surged ahead by over 2% amid a general rise in the domestic base metals market. In today, prices peaked at 16,515 RMB per ton, marking the highest level in over two months since January 25th. By the end of the day, the main Shanghai lead contract closed at 16,465 RMB per ton, up by 1.82%.

Tightened Supply is the Primary Driver

Market analysis indicates that the main reason for the surge in lead prices is the tightening supply. News of reduced production from overseas mines significantly impacted the market. Several companies announced temporary halts in mining operations and lead-zinc mine production, intensifying market expectations of a shortage in ore supply.

Maintenance at Domestic Smelters Aggravates Supply Tightness

Domestically, due to the approaching off-season for lead-acid battery consumption, primary lead smelters mostly chose to undergo maintenance during this period, further reducing market supply. According to recent surveys, additional smelters are expected to join the maintenance lineup by the end of the month, further exacerbating market expectations of tightened primary lead supply.

Decreasing Inventory Levels Support Prices

Inventory data also supports the upward trend in prices. As of March 25th, social inventories of lead ingots in five locations monitored by SMM fell to 55,900 tons, reaching a low point in a month. On March 28th, inventories continued to decline slightly to 56,200 tons, indicating a tense supply situation in the market.

Impact of Off-Season Consumption Begins to Show

Despite the strong resurgence in lead prices, the impact of the off-season for consumption in downstream sectors is becoming evident. Downstream enterprises are adopting cautious procurement behavior, and the operating rates of lead-acid battery companies have been declining since last week. According to traditional market patterns, April to May is the traditional off-season for the lead-acid battery market. If subsequent orders continue to weaken, the operating rates of enterprises may further decline.

Comprehensive Analysis

Overall, the current rise in lead prices is primarily driven by tightened supply. In late March, the lead market showed a trend of decreasing supply and demand. Although profits from recycled lead have somewhat recovered and production remains stable with some increase, the market still needs to pay attention to potential supply-side disturbances and the impact of the off-season for lead-acid battery consumption on the market.

Please note that market conditions are subject to change, and the above analysis is for reference only. Investors should exercise caution and consider the latest market information when making investment decisions.