Chinese lead prices climbed in April but sluggish local demand
is expected to cap gains in the coming month, according to
The benchmark July lead contract on the Shanghai Futures
Exchange gained 2.2% over the month to 15,835 yuan per tonne,
compared with 15,495 yuan per tonne on March 30.
On the Changjiang Nonferrous market, spot lead was trading at
15,650-15,800 yuan per tonne on April 27, up 150 yuan from
15,500-15,650 yuan per tonne on March 30.
But the increase in prices does not reflect an improvement in
demand, sources said.
The spot prices were actually following the futures
market; the real transactions were not active at all, an
analyst at Shanghai Metal Market said. Smelters and
traders maintained their prices because price cuts cant
boost sales at all amid pale demand.
Lead-battery producers ramped up production after the Chinese
New Year holidays and their inventory has been gradually
Chinas lead-acid battery output totalled 37,139,126 kWh
in the first quarter of 2012, up 6.5% year-on-year.
Monthly output in February rose 21.3% from the previous month,
while March monthly output increased by 18% month-on-month.
These were up by 13.6% and 14.9% year-on-year respectively,
according to data from the National Bureau of Statistics (NBS).
Orders for lead-acid batteries are not expected to pick up
after March when the slow season starts, Mo Guogang, a
Shenzhen-based analyst at China Investment Futures, said.
Local demand may decrease further in the coming months and
weigh on prices.
While lead-acid battery output is increasing steadily,
producers sales are not good and their booking orders
situation is not in good shape either [...] Major battery
makers are trying various efforts to control their inventory
levels, Long Lizhi, lead analyst at Jinrui Futures, said.
On the supply side, Chinas daily lead output fell by 6.7%
year-on-year in March, but rose by 15.7% from the previous two
months as the usage ratio recovered after the holiday season.
For the whole month, Chinese smelters produced 34,600 tonnes of
lead, down 6.7% year-on-year, but up 12.3% from a combined
output of 30,800 tonnes in the first two months of the year,
according to NBS.
Refined lead imports fell by 10% month-on-month to 523 tonnes
in March, by rose by 1.1% year-on-year. March exports of
refined lead were 460 tonnes, up from zero in February, and
down 8.1% year-on-year.
For the first three months of the year, China imported a net of
671 tonnes of refined lead.
It is very likely that battery makers will end up
reducing output given the [expected] pale local demand in the
coming months. This will certainly impact lead demand and
production in turn, Jinruis Long said.
Analysts now expect lead futures to find support between
15,600-16,000 yuan per tonne in May.