Macro and Fundamental Bullish and Bearish Factors Coexist, Short-term Lead Prices Expected to Maintain Consolidation [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,893/mt. Mixed overseas macro signals kept LME lead in a tight sideways range throughout the day. During Asian trading, LME lead gradually pulled back from near $1,895/mt to around $1,885/mt, before recovering those losses during the European session. It eventually settled at $1,885.5/mt, down 0.34%.

Overnight, the most-traded SHFE lead 2609 contract opened at 15,680 yuan/mt. SHFE lead warrant inventory saw a small destocking, and SHFE lead drifted higher at the open, stabilizing above the 15,700 yuan/mt mark. In the second half of the session, SHFE lead consolidated around 15,725 yuan/mt, ultimately closing at 15,715 yuan/mt, a gain of 0.26%. Open interest stood at 95,596 lots, down 2,193 lots from the previous trading day, with the most-traded contract's open interest continuing to pull back recently.

Macro front:

Israeli media reported that mediators believe the US and Iran are close to reviving the June memorandum of understanding, while an oil tanker at a Saudi refinery was attacked. US and Israeli leaders met, focusing on the Iran nuclear issue, with Israel claiming "full coordination" and the White House calling it "constructive." Iran set conditions for reopening the Strait of Hormuz, requiring ships to travel via Iranian waterways, abolishing the TSS, and banning third-party mine-clearing operations. OPEC+ plans to suspend production increases after September, stating it will assess the impact of the Iran war on supply.

:

Yesterday, the lead spot market saw SHFE lead consolidating on a weak note and suppliers remained cautious with shipments. For EXW cargoes from primary lead smelter sites, some smelters held back from selling at low prices, while traders continued normal sales, with mainstream production zone quote discounts against the SMM #1 lead average price narrowing further to 10-0 yuan/mt ex-works. On the secondary lead front, the wait-and-see sentiment among smelters eased somewhat, with some smelters resuming normal sales and secondary refined lead quotes at discounts of 25-0 yuan/mt against the SMM #1 lead average price ex-works, while a few were quoted at a premium of 125 yuan/mt. With month-end approaching, downstream enterprise purchasing demand was limited; a few showed dip-buying interest, while the rest generally purchased as needed, leading to thin trading in the spot market.

Inventory side: As of July 28, LME lead inventory was 447,750 mt, down 50 mt from the previous trading day. Total SHFE lead ingot warrant inventory was 57,602 mt, down 127 mt from the previous trading day.

Lead price outlook for today:

Overseas macro factors remain complex, with mixed bearish and bullish news, and the market currently lacks clear direction, awaiting the upcoming US Fed policy meeting. China's lead prices consolidating on a weak note, secondary lead smelters are deeply in the red with clear intentions for production cuts, while primary lead smelters are also ramping up maintenance, which is expected to ease the pressure from lead ingot inventory buildup to some extent. Additionally, lead smelters exhibit a strong sentiment of holding back from selling at low prices, with some enterprises halting shipments, and the spot market discount has narrowed, providing some support for lead prices. Demand side, the traditional peak season has yet to show signs of significant improvement, downstream enterprises still primarily relying on just-in-time procurement at month-end, and lead ingot inventories struggle to achieve notable destocking. It is expected that lead prices will continue to consolidate in the short term.

Data Source Statement: Non-public data are all derived from public information, market communication, and SMM's internal database models, processed by SMM, for reference only, and do not constitute decision-making advice.