Futures:
Overnight, the LME lead 3M contract on August 20 traded in a range, opening at $1,886/mt and consolidating sideways in a narrow range of $1,886-1,892/mt during the Asian session. It quickly dipped to the intraday low of $1,877.5/mt in early European trading before gradually recovering. After entering the combined European and US trading session (after 20:00 Beijing time), it accelerated its rally, hitting a high of $1,903.5/mt and eventually closing at $1,899.5/mt, up $13.5/mt from the previous trading day, a gain of 0.72%. The trading range for the session was $1,877.5-1,903.5/mt, with a volatility of $26/mt, trading volume of 6,876 lots, and open interest of 174,073 lots.
Overnight, the SHFE lead 2610 contract opened higher and moved higher in the night session, starting at 15,930 yuan/mt. It quickly rallied after opening, rising to around 16,060 yuan/mt, successfully breaking through the 16,000 yuan/mt mark. It then continued to drift higher, reaching a high of 16,120 yuan/mt and eventually closing at 16,115 yuan/mt, up 180 yuan/mt from the previous trading day's closing price, a gain of 1.13%. Night session trading volume was 39,852 lots, with open interest of 80,584 lots.
Notably, the rally in SHFE lead during the night session was highly synchronized with LME lead movement. LME lead accelerated its rally after 20:00 Beijing time, rising quickly from around $1,880/mt to $1,903.5/mt. SHFE lead followed suit immediately after the night session opened at 21:00, rallying from 15,940 yuan/mt, breaking through the 16,000 yuan/mt mark, and reaching a high of 16,120 yuan/mt. The two trends were highly correlated, with the combined strength of both SHFE and LME driving lead prices higher.
On the macro front:
This evening, the preliminary August manufacturing PMIs for France, Germany, the Eurozone, and the US will be released. The probability of the US Fed keeping rates unchanged in September was 63.8%, while the probability of a rate hike was 36.2%, with expectations of a rate hike in October further heating up. Additionally, the 5-year German bond yield touched 3% for the first time since 2008, and long-end US bond yields rebounded. The Middle East situation escalated sharply, with Trump announcing "the toughest economic action in history" against Iran, and the Houthis attacking Saudi Aramco facilities. Overnight, the three major US stock indices closed lower, putting industrial metals under short-term pressure.
National Development and Reform Commission (NDRC) Chairman Zheng Shanjie chaired a symposium with private enterprises to solicit opinions on stabilizing economic operations and promoting effective investment, releasing signals of stabilizing growth. Shanghai introduced the "Shanghai Eight Measures" for the real estate market, lowering the minimum down payment ratio for commercial personal housing loans. China and Switzerland completed the upgrade negotiations for their free trade agreement. The Ministry of Commerce commented separately on the EU's abuse of unilateral tools to suppress Chinese enterprises and the US tariff of 232 on Chinese drones.
Spot fundamentals:
SMM #1 lead prices rose by 50 yuan/mt (up 25 yuan/mt the previous day), with spot premiums offered by suppliers unchanged from the previous day. For primary lead cargoes self-picked up from the production site, suppliers had varying shipment sentiments, resulting in chaotic market quotes. Quotes from major production regions against the SMM #1 lead average price ranged from discounts of 20 yuan/mt to premiums of 100 yuan/mt EXW (with the previous day's premium cap at 50 yuan/mt). Secondary lead smelters showed an improved willingness to sell, though some held prices firm (the previous day, shipments mainly followed the market). Quotes for secondary refined lead against the SMM #1 lead average price were at discounts of 100-0 yuan/mt EXW. Downstream enterprises' wait-and-see sentiment intensified, with reduced acceptance of high lead prices. Some large downstream enterprises, after earlier procurement, mainly picked up goods under long-term contracts, showing cautious purchasing and very few new spot orders. Overall, the center of lead prices moved higher, with suppliers holding differing views. Some held prices firm with significantly raised premiums, while those bearish on the outlook actively sold. Cargo supply decreased in some regions, lifting spot premiums, and transactions entered a long-term contract trading state.
Inventory: As of August 19, LME lead inventory stood at 417,100 mt, down 1,475 mt from the previous trading day; SHFE lead ingot warrant inventory totaled 63,918 mt, down 1,572 mt from the previous trading day.
Lead price forecast for today:
Overall, the SHFE lead 2610 contract opened higher and moved higher overnight, with LME lead rallying in sync. The combined strength of both domestic and overseas markets drove the center of lead prices higher. Yesterday, SMM #1 lead prices rose by 50 yuan/mt. Suppliers were divided in sentiment, while downstream wait-and-see sentiment intensified, with reduced acceptance of high lead prices. Purchasing was mainly focused on long-term contract pick-ups, with very few new spot transactions, indicating limited actual supply and demand follow-through. Today, SHFE lead is expected to consolidate on a strong note at high levels, with attention needed on changes in daytime session fund positions, spot transaction follow-through, and the impact of evening European and US PMI data.
![SHFE lead surged past 16,000 yuan/mt in night session, SHFE and LME jointly consolidate on a strong note at high levels [SMM Lead Morning Briefing]](https://imgqn.smm.cn/usercenter/xVgcv20251217171721.jpg)
