On the Eve of Delivery, Pressure From Rising China Refined Lead Inventory Remained Undiminished, and Lead Prices Continued to Be in the Doldrums [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $1,934.5/mt and moved sideways around the daily average during the Asian session. Entering the European session, it briefly rose to test the $1,940/mt level before weakening again to a low of $1,930/mt. It then rebounded and recovered all losses, touching a high of $1,946/mt before the close and finally settling at $1,945/mt, up $14/mt, or 0.73%.

Overnight, the most-traded SHFE lead contract gapped lower to open at 16,605 yuan/mt. Early in the session, supported by stronger LME lead, it climbed to a high of 16,680 yuan/mt before pulling back and consolidating above the intraday average. It edged up slightly before the close and eventually settled at 16,665 yuan/mt, down 25 yuan/mt from the previous day, or 0.15%.

As shipping through the Strait of Hormuz was nearly at a standstill, production cuts by Middle Eastern oil-producing countries also kept escalating. Three sources familiar with the matter revealed that the Trump administration in the US had asked Israel to stop further airstrikes on Iran’s energy facilities, especially oil infrastructure. This was said to be the first time the US had clearly restrained Israeli military operations since the joint US-Israeli military action against Iran began. The US made this request partly because of concerns that it could push up global oil prices and trigger large-scale Iranian retaliation against energy infrastructure in the Gulf region. The 2026 draft report on central and local fiscal budgets clarified the total national defense expenditure budget, and Zhang Xiaogang introduced this year’s national defense spending arrangements. In 2026, the national general public budget arranged national defense expenditure of 194 billion yuan, up 6.9% from the previous year’s executed amount, of which central government spending was 191 billion yuan, up 7% from the previous year’s executed amount.

Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted at discounts of 100-0 yuan/mt against the SHFE lead 2604 contract. SHFE lead remained in the doldrums, and with delivery approaching, some suppliers shifted cargoes to ship to delivery warehouse, reducing shipment pressure and relatively narrowing discounts. This was mainly reflected in primary lead smelter cargoes self-picked up from production site, with ex-works quotations in mainstream producing areas ranging from discounts of 50 yuan/mt to premiums of 75 yuan/mt against the SMM #1 lead average price. In addition, secondary lead smelters held prices firm in shipments, with secondary refined lead quoted ex-works around parity with the SMM #1 lead average price. As arrivals of imported lead increased, however, discounts on individual secondary refined lead quotations widened to 200 yuan/mt ex-works. Downstream enterprises bought the dip on demand, mainly purchasing primary lead, and transactions relatively improved.

Inventory: As of March 10, LME lead inventory stood at 284,875 mt, flat from the previous day; as of March 9, SMM social inventory of lead ingot across five regions continued its accumulating trend.

Lead Price Forecast for Today:

Recently, downstream enterprises have still mainly been digesting inventories, with low enthusiasm for procurement and stockpiling. After lead ingot inventories accumulated at medium- and large-scale smelters in Henan and other regions, they were continuously transferred to social warehouses. For secondary refined lead, as scrap battery prices remained firm while lead prices were in the doldrums, smelters showed low enthusiasm for shipments and ramping up operating rates, and discounts in spot secondary refined lead quotations narrowed, with downstream just-in-time procurement tilting toward primary lead. In addition, secondary refined lead will enter delivery as substitutes, coupled with replenishment from imported lead, refined lead social inventory is expected to find it difficult to reverse the short-term trend of continued accumulation, and lead prices remain under pressure.