Mediocre Fundamental News, Limited Support for Lead Prices [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,887.5/mt. As the US dollar index drifted lower, LME lead drifted higher in Asian trading to reach a high of $1,904.5/mt. Entering European trading, it was dragged lower by high inventory pressure, plunging and giving back all gains to hit a low of $1,885.5/mt, before eventually closing at $1,891/mt, up 0.19%. Overnight, the most-traded SHFE lead 2608 contract opened at 16,050 yuan/mt. It initially touched a high of 16,120 yuan/mt before drifting lower, and near the close it dipped to 16,045 yuan/mt, finally settling at 16,050 yuan/mt, down 0.09%.

On the macro front:

World Gold Council: Global gold ETFs saw net outflows of $8.9 billion in June, with total net inflows of $8 billion in H1. Fed minutes: A few officials thought a rate hike was necessary in June but still supported keeping rates unchanged. Most officials considered that a shorter statement had its advantages and supported removing the “easing bias.” Officials were clearly divided on the rate path, with both rate hikes and cuts seen as possible. South Korea’s KOSPI index has retreated over 20% from its June high, entering a technical bear market. The IMF lowered its global economic growth forecast and raised its growth projection for China. The central bank's Monetary Policy Committee held its Q2 2026 regular meeting.

Spot fundamentals:

Yesterday, SHFE lead stopped falling and rebounded. Suppliers actively quoted and sold, especially primary lead smelters significantly increased EXW quotations. Quotations from mainstream production areas were at discounts of 30 yuan/mt to premiums of 30 yuan/mt against the SMM #1 lead average price, EXW. On the secondary lead side, smelters' reluctance to sell at low prices eased somewhat. Some secondary lead enterprises resumed quoting and selling, but market quotes diverged significantly, with secondary refined lead quotations at discounts of 50 yuan/mt to premiums of 50 yuan/mt against SMM #1 lead, EXW. Downstream enterprises maintained a strong wait-and-see sentiment, with reduced inquiries and primarily taking deliveries from long-term contracts, while spot order trading was sluggish.

On the inventory front, on July 8, LME lead inventory decreased by 650 mt to 291,425 mt. As of July 6, SMM lead ingot social inventory across five regions totaled 70,200 mt, down 2,300 mt from July 2.

Lead price forecast for today:

Although LME lead has seen slight destocking recently, high lead ingot inventory outside China remains the biggest bearish factor in the current market. In the Chinese market, the most-traded SHFE lead 2607 contract is approaching delivery, and lead ingot social inventory is also a focus of attention. Currently, fundamental news is rather subdued, offering limited support to prices. In the near term, we need to pay more attention to the US dollar index trend and the exit of bearish capital on lead prices.