Lead Ingot Destocking Boosts Lead Prices While Geopolitical Risks Persist [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $1,962/mt. Affected by overseas geopolitical risks, the market was influenced by bullish and bearish factors, with LME lead mostly fluctuating between $1,970-1,980/mt. However, it fell several times after entering the European session, shifting its overall center downward, and finally closed at $1,961/mt, up 0.05%.

Overnight, the most-traded SHFE lead 2604 contract opened at 16,945 yuan/mt. Lead ingot inventory began to decline. At the beginning of the session, SHFE lead surged to 17,020 yuan/mt, reaching a one-month high. Subsequently, the tug-of-war between longs and shorts intensified, causing SHFE lead to give back some of its gains and fluctuate between 16,900-16,950 yuan/mt. It eventually closed at 16,905 yuan/mt, up 0.42%; open interest reached 62,305 lots, down 1,657 lots from the previous trading day.

On the macro front:

US Trump: Will not stop until the goal is achieved, does not rule out sending US ground troops to Iran if "necessary," stating that the "big wave" of strikes against Iran has not yet begun, and actions may last for four to five weeks, with preparations made for a longer period. NATO and the UK both stated they will not participate in US-Israeli military action against Iran; Kuwait reported "several" US fighter jets crashed; the Shanghai Cooperation Organization (SCO) said the use of force is unacceptable and called for restraint from all parties. Iran: Will not negotiate with the US, the decision on when to stop the war is up to Iran, and it did not attack Saudi Aramco; the Strait of Hormuz has been closed, and any ships attempting to pass through will be attacked. Additionally, after an attack on a Qatari company, production at the world's largest LNG export plant was suspended, and European natural gas futures surged over 50% intraday; the largest Saudi refinery was shut down due to a drone attack, and European gasoline futures rose more than 20% intraday.

In the lead spot market yesterday, SHFE lead continued to hold up well. Suppliers were actively shipping goods, and with cargoes re-entering the market after delivery, the availability of circulating goods increased in Jiangsu, Zhejiang, and Shanghai. Meanwhile, electrolytic lead smelters shipped goods as per the market, with mainstream origin quotations ranging from a discount of 25 yuan/mt to a premium of 25 yuan/mt against the SMM #1 lead price. As lead prices rose, secondary lead smelters also became more active in shipping, with secondary refined lead quotations ranging from a discount of 50-0 yuan/mt against the SMM #1 lead average price. After resuming operations, downstream enterprises gradually purchased as needed, with inquiries increasing compared to the previous Friday, leading to relatively improved activity in the lead spot market.

Inventory: As of March 2, LME lead inventory remained flat at 286,100 mt; SMM five-region social lead ingot inventory slightly decreased but still remained at a five-month high.

Today's lead price forecast:

Entering the second week after Chinese New Year, most domestic lead-acid battery enterprises have resumed operations, and lead consumption is gradually recovering. On the supply side, due to losses in secondary lead, some secondary lead smelters have postponed their resumption plans to mid or late March. Additionally, some primary lead enterprises in Hunan have also delayed their resumption, resulting in a slower recovery in supply compared to the demand side, which has offset the pressure of lead ingot inventory buildup, providing some support to lead prices. In addition, the escalation of geopolitical risks in the Middle East, including prominent contradictions such as maritime transportation and energy supply, requires continued attention to the impact of these events on the lead market.

Data Source Statement: Apart from publicly available information, other data are derived from public information, market communication, and SMM's internal database model, processed by SMM for reference only and do not constitute decision-making advice.