Fundamentals Show Weak Supply-Demand Dynamics, Lead Prices Expected to Maintain Rangebound Fluctuations in the Short Term [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,965/mt. With no significant changes in fundamentals and a tug-of-war between longs and shorts entering a relatively stalemate state, LME lead fluctuated rangebound throughout the day, mostly trading between $1,960/mt and $1,970/mt, and finally closed at $1,967/mt, up 0.28%, ending the recent six-day losing streak.

Overnight, the most-traded SHFE lead 2603 contract opened at 16,585 yuan/mt. Trading was sluggish during the session, and as the holiday approached, some participants left the market, causing the SHFE lead's fluctuation range to narrow again. It basically traded between 16,600 yuan/mt and 16,625 yuan/mt during the night session until finally closing at 16,620 yuan/mt, up 0.12%. Its open interest decreased by 1,143 lots to 57,133 lots compared to the previous trading day.

On the macro front:

It was reported that Xi Jinping held a phone conversation with US President Trump. Xi Jinping held a video meeting with Russian President Putin. PBOC: Focus on supporting key areas such as expanding domestic demand, technological innovation, and small and medium-sized enterprises. Additionally, US job growth slowed significantly, with January ADP employment increasing by 22,000, below the expected 45,000. The US January ISM Services PMI hit a new high since 2024, employment barely expanded, and the price index climbed.

:

In the lead spot market yesterday, lead prices maintained a weak consolidation. Traders generally sold at discounts, while smelters were reluctant to sell at low prices, with relatively firm quotations. Mainstream origin quotations against the SMM #1 lead average price were at discounts of 50 yuan/mt to premiums of 50 yuan/mt ex-works. In the secondary lead sector, losses widened, leading to increased production cuts or suspended shipments by smelters. Secondary refined lead quotations against the SMM #1 lead average price were at discounts of 25 yuan/mt to premiums of 50 yuan/mt ex-works, with the price spread between primary lead and secondary lead inverted in mainstream origins. Downstream enterprises completed their pre-holiday stockpiling successively, with some having suspended purchases, while others made purchases as needed at low prices. A small amount of heavily discounted material could be used for additional stockpiling.

Inventory: As of February 4, LME lead inventory remained flat compared to the previous trading day, staying at 23,285 mt. SMM lead ingot social inventory across five regions continued its upward trend and remained at a two-month high.

Today's lead price forecast:

As the Chinese New Year holiday approaches, enterprises across the lead industry chain have gradually begun holidays, especially downstream enterprises, directly leading to weaker spot lead trading. The overall market saw sluggish supply and demand, weighing on lead prices and maintaining weak consolidation. Furthermore, pre-holiday lead consumption is decreasing, increasing the risk of lead ingot inventory buildup. Meanwhile, raw material prices such as scrap batteries remain high, causing losses for secondary lead enterprises. Cost support coexists with inventory buildup risks, and short-term lead prices are expected to continue fluctuating rangebound.

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