Futures:
Overnight, the LME lead 3M contract drifted higher on September 3, opening at $1,895.5/mt, trading in a range of $1,893.0-1,908.0/mt with an amplitude of $15/mt, and closing at $1,907.0/mt, up $8.5/mt or 0.45% from the previous trading day's closing price. The daily candlestick formed a small bullish candlestick, with volume of 6,408 lots and open interest of 170,974 lots.
Overnight, the SHFE lead 2610 contract opened at 16,135 yuan/mt in the night session, briefly shot up to 16,165 yuan/mt after the open before quickly pulling back, dipped to 16,085 yuan/mt around 22:00, then consolidated in a narrow range of 16,085-16,115 yuan/mt, and finally closed at 16,095 yuan/mt, down 25 yuan/mt or 0.16% from the previous trading day's closing price. Prices remained firmly above the Bollinger middle band and the 16,000 yuan mark.
On the macro front:
Overseas, US Fed Governor Waller made conditional remarks, saying that if August inflation came in higher than expected, he would consider a rate hike, while if it improved, he would lean toward keeping rates unchanged. The market subsequently lowered expectations for a September rate hike, and the US dollar index pulled back 0.56% to 98.99, while the 10-year US Treasury yield fell to 4.775%. US initial jobless claims last week came in at 206,000, higher than expected, while the S&P Global US services PMI for August rose to 56.5, the highest since December 2024. Tensions in the Middle East continued to escalate, with Iran striking US bases in the UAE and Kuwait, and Israel threatening to strike all of Iran's infrastructure. Supply disruption concerns kept oil prices near six-week highs, with WTI and Brent closing at $89.64/bbl and $94.62/bbl respectively, and US diesel prices rising to their highest since mid-2022. Tonight at 20:30, the US August non-farm payrolls report (unemployment rate, non-farm payrolls, hourly wages) will be released, serving as a key guide for next week's rate path.
In China, President Xi Jinping returned to Beijing after concluding the SCO summit and state visits to Kyrgyzstan and Egypt. The Ministry of Commerce responded to the US using the G20 to hype the "economic imbalance" narrative, expressing firm opposition. In the first seven months, China's total services imports and exports rose 8.3% YoY. The "15th Five-Year" plan for promoting the development of small and medium-sized enterprises was released, proposing that by 2030, per-capita operating revenue of above-scale SMEs will have grown by around 15% cumulatively.
Spot fundamentals:
Yesterday, SMM #1 lead prices were flat. Primary lead suppliers held prices firm, warrant cargo supply was limited, and quotes were mainly at premiums, with mainstream premiums of 0-50 yuan/mt. Primary lead showed north-south divergence, with maintenance tightening supply in south China and some suppliers suspending quotes, while supply in the north loosened and transactions were sparse. Secondary refined lead was quoted at discounts of 100-50 yuan/mt, and smelter shipments were moderate. Downstream buyers purchased as needed ahead of the weekend, preferring EXW cargoes, with overall trading activity moderate.
Inventory: As of September 2, SMM lead ingot social inventory across five regions totaled 71,100 mt, up 200 mt from August 31 and up 1,800 mt from August 27. As of September 3, LME lead inventory stood at 396,825 mt, down 2,775 mt from the previous trading day; SHFE lead ingot warrant inventory totaled 57,793 mt, unchanged from the previous trading day.
Today's lead price forecast:
Overnight LME lead closed up 0.45%, with LME inventory continuing to decline. The stabilization of the LME, combined with domestic suppliers holding prices firm and maintenance tightening supply in south China, supported the downside of lead prices. However, SHFE lead was relatively weak in the night session, domestic social inventory shifted from destocking to slight accumulation, and recycled lead discounts, looser supply in the north, along with downstream purchasing as needed ahead of the weekend, weighed on prices. Spot lead prices are expected to remain at high levels and move sideways today, with attention on the 16,000 level and transaction follow-through before the weekend.
