Overnight Broad-Based Gains in Nonferrous Metals Boosted Lead Futures, Short-Term Lead Price Support Remains Moderate [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,957/mt, moving sideways around the daily average during the Asian session. Entering the European session, the US dollar index strengthened before pulling back, and the broad-based gains in nonferrous metals boosted LME lead to rise all the way to a high of $1,996/mt. After small fluctuations at high levels, it finally closed at $1,995.5/mt, up $36/mt or 1.84%. Overnight, the most-traded SHFE lead contract opened at 16,715 yuan/mt, initially dipped to a low of 16,700 yuan/mt, then fluctuated upward, lightly touching 16,800 yuan/mt at highs, and finally closed at 16,790 yuan/mt, up 45 yuan/mt or 0.27%.

On the macro front: US Trade Representative Greer recently stated that the US will continue to advance the 301 investigation into China's implementation of the Phase One trade deal and may take tariff measures. Against the backdrop of a rebound in risk appetite, market expectations for the US Fed to start interest rate cuts before mid-year have significantly cooled, with expectations for a June rate cut diminishing. German Chancellor Friedrich Merz paid his first official visit to China from February 25 to 26, accompanied by a high-level delegation including 30 representatives from the German business community.

Spot fundamentals:

In the Shanghai market, Chihong lead was quoted at discounts of 80-50 yuan/mt against the SHFE lead 2603 contract. SHFE lead maintained a consolidation trend, and as it was late February with the transition between old and new long-term contracts, some suppliers actively cleared inventory by shipping goods at discounts, while a few traders purchased on dips. Downstream enterprises were still in the early stages of resuming work, with limited rigid demand and few inquiries. In terms of secondary lead, some smelters had not yet resumed production, market quotations were scattered, operating enterprises held prices firm for shipments, and secondary refined lead was quoted at premiums of 0-25 yuan/mt against the SMM #1 lead average price ex-works. Downstream enterprises adopted a wait-and-see approach with minimal purchases, and spot order market transactions had not improved significantly.

Inventory: On February 25, LME lead inventory decreased by 25 mt to 286,300 mt. As of February 24, the total social inventory of lead ingots across five regions tracked by SMM accumulated further, with the total jumping to a five-month high.

Today's lead price forecast:

This week, downstream enterprises gradually resumed work and production, with spot purchases mainly focused on long-term contract cargo pick-up, while spot order purchasing demand remained weak. On the supply side for refined lead, primary lead smelters in Hunan that underwent maintenance and production cuts during the holiday gradually resumed crude lead production; primary lead output is expected to recover sequentially from early March to mid-March, with quotations relatively firm. For secondary refined lead, supply recovery was limited by the end of February, but a concentrated recovery is anticipated in early March. Subsequently, the lead market is expected to see both supply and demand increase after the recovery in lead consumption. This week, as the supply of refined lead has not yet recovered concentratedly, support for lead prices remains moderate, and lead prices may continue to move sideways in the short term.