Supply Tightens Provide Support & High Prices Suppress Demand, Lead Prices Move Sideways [SMM Lead Morning Meeting Summary]

Futures:

Overnight, the LME lead 3M contract drifted higher on August 26, opening around $1,900.5/mt, trading in a range of $1,897.5-1,912.5/mt, a spread of $15/mt, pulling back slightly in late trading, finally settling at $1,905.5/mt, up $9.5/mt or 0.50% from the previous trading day; 5,371 lots were traded, open interest stood at 173,521 lots, a decrease of 299 lots.

Overnight, the SHFE lead 2610 contract moved sideways in the night session, opening at 16,130 yuan/mt, consolidating repeatedly in a 16,115-16,155 yuan/mt range, with a highest price of 16,160 yuan/mt and lowest price of 16,110 yuan/mt, finally settling at 16,115 yuan/mt, down 5 yuan/mt or 0.03% from the previous closing price; the night session traded 23,277 lots, open interest at 71,415 lots, a decrease of 1,086 lots.

On the macro front:

The US July PCE price index annual rate came in at 3.7%, flat from the previous month, above market expectations of 3.6%, showing sticky inflation, and expectations for a US Fed interest rate hike next month heated up. The US dollar index rose 0.26% to 99.15, and spot gold pulled back 1.38%. Middle East tensions remained uncertain. EIA data showed the US Strategic Petroleum Reserve decreased by 3.7 million barrels. Nvidia delivered better-than-expected earnings, and is expected to see revenue growth of about 70% for fiscal year 2028. Today, the Jackson Hole Economic Symposium will be held, with global monetary policy signals in focus.

Chinese President Xi Jinping will attend the 2026 Shanghai Cooperation Organisation Summit and visit Kyrgyzstan and Tajikistan. Shanghai issued the "15th Five-Year Plan" for strategic emerging industries and pioneering industries to promote the integrated development of satellite internet with BeiDou, 6G, and AI. The three major A-share indexes edged higher, with the non-ferrous metals sector strengthening; CMOC rose over 4%, Zijin Mining gained over 3%, and Chalco rose over 2%.

Spot fundamentals:

Yesterday, the SMM #1 lead price rose 50 yuan/mt, and SHFE lead continued to consolidate on a strong note. Primary lead side, smelters in major production areas underwent more maintenance, available supply was limited, and suppliers held prices firm and shipped at premiums, with some having no spot order quotes for the time being, resulting in noticeable regional divergence. Secondary lead side, secondary refined lead was shipped at discounts of 100-0 yuan/mt to the SMM #1 lead average price, with a few sources at a premium of 50 yuan/mt. Downstream side, lead prices remained high, and enterprises mainly made just-in-time procurement, cautious about purchasing at premium prices; the majority relied on long-term contracts to maintain production, and spot trades were sluggish.

Inventory side: As of August 26, LME lead inventory was 410,600 mt, down 1,600 mt from the previous trading day; SHFE lead ingot warrant inventory was56,991 mt, a decrease of25 mt from the previous trading day.

Lead Price Forecast for Today:

Recently, extensive maintenance at smelters in major producing areas has resulted in limited market supply. Generally, suppliers held prices firm and sold at premiums, providing support for lead prices from below. However, with lead prices staying high, downstream purchasing was cautious, prioritizing long-term contract supplies. Overall trading volume was limited, restricting upside room. The SHFE lead night session continued to consolidate at highs, with the daily candlestick chart showing three consecutive doji patterns, reflecting a stalemate between bulls and bears. LME lead closed up 0.50%, with LME showing strength. Today's spot lead prices are expected to stay firm at highs and move sideways. Attention should be paid to the sustainability of suppliers' price-holding and changes in downstream purchasing.