Invisible Inventory Becomes Visible, Lead Prices Still Await Consumption Expectations to Materialize [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,064/mt. With US manufacturing PMI shrinking, market concerns about economic slowdown intensified, leading to a sharp decline in major commodities like copper and oil. LME lead also showed a downward trend throughout the day, hitting a two-week low of $2,028.5/mt. By the end of the session, some bears exited, and LME lead reversed its trend, finally closing at $2,065/mt, up 0.15%.

Overnight, SHFE lead warehouse warrant inventory increased daily. The most-traded SHFE lead 2410 contract opened at 17,200 yuan/mt, with strong bearish forces causing SHFE lead to quickly drop to around 17,100 yuan/mt at the beginning of the session. Later, driven by the rise in LME lead and the support from domestic secondary lead costs, SHFE lead stopped falling and rebounded, finally closing at 17,205 yuan/mt, down 0.41%. Its open interest reached 54,448 lots, an increase of 622 lots from the previous trading day.

Macro-wise, the US August ISM Manufacturing Index remained in contraction for five consecutive months, reigniting concerns about economic slowdown and bets on significant rate cuts by the US Fed, leading to a drop in US and European stocks and a rise in bonds. However, the US dollar index hovered near a two-week high.

Fundamentally, domestic lead ingot inventory gradually increased. Coupled with the upcoming delivery of the SHFE lead 2409 contract, holders moved inventory to warehouses, turning invisible inventory into visible inventory, putting pressure on lead prices. Meanwhile, the supply of battery scrap showed no significant improvement, and smelters maintained reduced production. Additionally, electric bicycle lead-acid battery companies continued to promote sales by lowering battery prices, improving dealers' purchasing enthusiasm. Future attention will be on the destocking of batteries by producers and the impact on production and procurement.