US Dollar Index Rebounded, LME Lead, under Pressure, Closed Lower [SMM Lead Morning Brief]

SMM, August 4:

Overnight, LME lead opened at $1,878.5/mt, hit a high of $1,885.5/mt during Asian trading hours, and then drifted lower. As the US dollar index rebounded, LME lead came under pressure, touching a low of $1,858.5/mt after entering the European session, before finally settling at $1,867/mt, down 0.72%.

Overnight, the most-traded SHFE lead 2609 contract opened at a high of 15,385 yuan/mt, then drifted lower as bears added positions. It touched an intraday low of 15,205 yuan/mt, moved sideways, and finally settled at 15,255 yuan/mt, down 1.13%.

Lead prices have tumbled recently, hitting a three-year low. Downstream lead-acid battery enterprises have adopted a cautious stance and procurement has been prudent. Against the backdrop of sluggish consumption, in-factory inventory at lead smelters has been rising steadily since late July. Primary lead suppliers have been shifting lead ingots to delivery warehouses, pushing social inventory of lead ingots further higher. The movement of ingots into warehouses is expected to continue before the delivery, and social inventory of lead ingots will keep growing. Due to expected additional maintenance at primary and secondary lead smelters, the slowdown in lead ingot supply will limit the increase in inventory. Overall, bearish factors on lead prices remain strong, and attention should be paid to the support from supply-side slowdown.