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The most-traded July lead contract price on the SHFE rose to 20,425 yuan ($3,185) per tonne as at 10am Shanghai time, up 540 yuan per tonne from Monday’s closing price.
Stringent environmental regulations in China that came into effect in March have seen many off-grade secondary lead factories in the country shut, which has led to a wider supply deficit in the market.
Declining stock levels have exacerbated the situation.
Lead stocks in SHFE-approved warehouses fell to 10,967 tonnes in the week to June 1, down 13% or 1,709 tonnes from the prior week’s 12,676 tonnes.
“The environmental protection governance efforts so far this year have been beyond expectation, and has led to the significant shrinkage in [lead] supply. We don’t expect relief in the short term,” Citic Futures Research said.
Meanwhile, copper prices continued their recent run of strength, albeit at a slower pace, after trading activity thinned and investors looked to take profits at these elevated levels.
The most-traded July copper contract price on the SHFE rose to 52,040 yuan per tonne as at 10am, up 280 yuan per tonne from Monday’s close.
“Copper prices remained in an upward trend on firm downstream demand in the domestic market. However, given the current high prices of copper, trading activity has thinned of late and traders’ intentions to lock in profits has strengthened,” Xianfei Ji, analyst of Guotai Junan Futures, said on Tuesday.
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