The hottest demand season is coming late. Where wi

2022-07-30
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The peak demand season is coming late, where will lead prices go in the future?

looking at the performance of lead prices in the past, the third quarter of each year is usually a relatively sharp time period for the trend of lead prices. According to the statistics since the listing of Shanghai lead futures, the rising probability of the market from July to September is 83.3%, 66.7% and 66.7% respectively. Before 2016, the trading volume and market price fluctuation of Shanghai lead varieties were at a relatively low level. From the market trend in 2016 and 2017, the increase rates in the third quarter reached 17.13% and 19.05% respectively. The main reason for this is that the supply side structural reform in 2016 had a great impact on the supply side. In addition, the traditional boom of lead varieties made great efforts to resolve the contradiction of excess capacity, and the seasonal demand was relatively strong. Therefore, the lead price rose sharply in 2016, especially in the second half of the year. In 2017, although the supply and demand pattern of lead varieties in the whole year has changed from the situation of short supply in 2016 to the situation of oversupply, the downstream demand was still relatively strong in the third quarter, so the lead price also increased significantly in the third quarter. In addition, with the long position closing behavior, the upward attack of the market in the traditional peak season of downstream demand is more fierce

however, since this year, it is well known that the price of lead unexpectedly fell by 10.25% in July. The main reasons are as follows

the first is the impact of ecological and environmental protection supervision and relevant policies. From April to June, the central environmental protection supervision team successively went to Anhui, Hebei, Henan, Jiangxi, Yunnan and other provinces with relatively dense recycled lead smelters, which made the market public opinion full of exaggeration about the limited capacity of recycled lead at that time. During this period, the lead price also rose substantially. However, what may actually be ignored by the market is that although the eco-environmental protection supervisor does impose great restrictions on the production capacity and output of recycled lead, the eco-environmental protection supervisor is also a "double-edged sword", because it will also exert heavy pressure on the battery enterprises downstream of the lead industry chain

in fact, as early as the end of May and the beginning of June this year, CCTV exposed the illegal sewage discharge of a battery factory in Jiangxi, followed by the shutdown and rectification of battery enterprises in Yifeng, Jiangxi. At that time, it was expected that the demand for refined lead would reach about 30000 tons per month. In addition, by observing the operating rate of downstream battery enterprises, it can be found that although the operating rate of small and medium-sized renewable lead enterprises in some regions was even less than 20% in May and June, the operating rate of downstream small and medium-sized battery enterprises was also lower than the level before the arrival of the previous peak season, that is to say, the operating rate was maintained between 30% and 40%. Cutting edge new materials are leading the development direction of new material technology An incubator for emerging industries, which to a large extent also limits the demand for lead varieties. Since the relatively large upward movement of lead prices from April to June mentioned earlier was based on the environmental protection and production restriction and the expectation of the upcoming peak season demand, when the time really entered July, the demand recovery of downstream storage enterprises did not come as scheduled, which largely frustrated the market expectations, resulting in the sharp upward movement of the market in July this year, as in previous years

in addition, in addition to the short-term impact of ecological and environmental protection supervision on downstream storage. In fact, in the past two years, some relevant national policies for the downstream end consumption industry have also greatly affected the demand of the downstream end industry for lead-acid batteries

for example, last year, the state issued a new national standard for electric bicycles, which restricts the weight and appearance of the whole vehicle. The new national standard stipulates that the weight of the whole vehicle of electric bicycles classified as non motor vehicles must be less than 55kg, and foot pedals must be installed. (officially implemented on April 15, 2019) therefore, in order to meet the requirements of the new national standard, electric bicycle manufacturers will be forced to choose lithium batteries with relatively light quality as power batteries. This has almost caused an irreversible blow to the demand for lead-acid batteries in the electric bicycle industry

for another example, the Ministry of industry and information technology has previously proposed a guideline to recommend the use of lithium batteries for the driving form of low-speed four-wheel electric vehicles. The original low-speed four-wheel electric vehicle was regarded as a potential growth point for the demand for lead-acid batteries. However, after the Ministry of industry and information technology issued the instruction to recommend the use of lithium batteries, it seems that this potential growth point will also be difficult to realize in the future

in fact, the expectation that lead-acid batteries may be gradually replaced by lithium batteries has been around for a long time. However, the embarrassing situation of "low peak season" in this summer has intensified the market's concern about this expectation, which has also affected the trend of lead prices in July to some extent

finally, perhaps the most important reason for the z-connection is the "abortion" of the long position pressing behavior. The refabricator 3D printing material recycling system is one of the goods carried. In fact, it should have been noted that only four days after the delivery of the Shanghai lead contract in July, the main pb1808 contract positions at that time were rapidly and substantially reduced, and lost the status of the main contract. However, at the same time, the lead futures warehouse receipts of the previous period were significantly more than doubled, This is to give a clear attitude to the Bulls who are trying to close positions, and will not let them close positions as they have done in the past two years. In addition, the expected peak season has not been fulfilled yet, and the macro environment is too empty due to the Sino US trade war, which makes the Bulls trying to close their positions helpless

after analyzing the reasons for the weak market in July, what is more important is the outlook for the future market. It can be seen that in the past July and August, the operating rate of downstream demand showed a certain recovery, and with the continuation of high temperature weather, the demand for battery replacement by end consumption is still expected to exist. In addition, the factors of empty macro environment caused by the trade war are gradually being digested by the market. Therefore, before the fourth quarter, There may still be a certain counter offensive market for lead varieties. Of course, this round of counter offensive will be difficult to exceed the range in 2017. In fact, there has been a sharp counter offensive in lead prices since the middle and late August, but it will also give higher profit space to the renewable lead enterprises that have resumed production before, so as to improve their enthusiasm to increase production, In addition, the strengthening of domestic lead price will also increase the profit level of lead import, thus attracting some foreign inventory inward flow. Because from the change of inventory in Klang port, Malaysia, which is the closest to China and the most convenient for transportation, there has been another decline recently. Because Klang port is relatively close to China, and China is the country and region with the largest demand for lead, Therefore, it cannot be ruled out that with the continuous opening of domestic import profitability, this part of inventory may flow to China. Therefore, after entering the fourth quarter, with the weakening of downstream demand, the lead price may usher in a downward trend until it is close to the traditional replenishment peak of battery enterprises around the Spring Festival. At that time, the lead price will have the opportunity to make a certain counterattack again

to sum up, it is expected that lead prices will show an n-shaped trend from now on to around the lunar new year

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