Supply tightening expectations narrow spot lead discounts, focus on lead price bottom support [SMM Lead Morning Meeting Summary]

Futures:

Last Friday, LME lead opened at $1,895/mt, drifting lower then stabilizing in the Asian session; entering the European session, it briefly touched a high of $1,899/mt before weakening, dipping to a low of $1,875.5/mt in late trading, and finally closed at $1,880.5/mt, down 0.69%.

Last Friday night, the most-traded SHFE lead 2609 contract opened at 15,550 yuan/mt, lightly touched a high of 15,565 yuan/mt at the start before drifting lower, dipped to 15,360 yuan/mt in late trading, and finally settled at the low of 15,360 yuan/mt, down 1.22%.

On the macro front:

South Korea's KOSPI index rallied nearly 18% last Friday, posting its largest single-day gain on record, with a monthly decline of 22% ranking as the third-largest in history. Foreign investors net purchased 7.2 trillion won worth of KOSPI shares last Friday, hitting an all-time high. On the first day of tighter regulations on leveraged ETFs in South Korea, trading volume plummeted 75%. South Korea's July exports surged to the second-highest level on record, and semiconductor exports soared nearly 180% YoY. The US Fed: ① Fed Chairman Walsh considered reducing the frequency of annual meetings. ② Several Fed officials voiced support for interest rate hikes, intensifying hawkish pressure internally.

China's manufacturing PMI for July was 49.2%, with manufacturing production showing good resilience. The People's Bank of China held a work conference for H2 2026, continuing to implement moderately accommodative monetary policy. July sales performance from new energy vehicle startups was released, with BYD sales exceeding 410,000 units to reach a new high, and Leap Motor surpassing the 100,000-unit mark.

Spot fundamentals:

In the Shanghai market, Chihong lead was quoted at 15,600-15,630 yuan/mt, at premiums of 50-80 yuan/mt against the SHFE 2609 contract. The center of SHFE lead shifted lower again, with suppliers reducing shipments and limited quotes from the Jiangsu, Zhejiang, and Shanghai markets. Meanwhile, EXW cargo quotes from primary lead smelters showed north-south divergence, with suppliers in the northern market actively quoting and selling, while those in the southern market held back from selling at low prices, offering few quotes, and mainstream production areas quoted at premiums of 0-25 yuan/mt against the SMM #1 lead average price. In secondary lead, smelters had many shutdowns, with some secondary lead smelters holding prices firm to sell, and secondary refined lead quotes were at premiums of 20-50 yuan/mt against the SMM #1 lead average price, with individual quotes at a premium of 125 yuan/mt. Downstream enterprises remained mainly engaged in just-in-time procurement, with wait-and-see sentiment rising, and spot market trading was thin.

Inventory side: On July 31, LME lead inventory decreased by 4,575 mt to 441,275 mt; as of July 30, total SMM lead ingot social inventory across five regions reached 68,500 mt, up 6,100 mt from July 23, and up less than 100 mt from July 27.

Lead price forecast today:

In August, lead consumption is expected to show no improvement, with downstream enterprises cautious in procurement and lead ingot inventory accumulating, dragging lead prices to consolidate on a subdued note. Meanwhile, increased maintenance and production cuts at primary and secondary lead smelters, along with expectations of supply tightening, drove the narrowing of spot discounts for lead, providing strong support for lead prices.