China lead ingot social inventory continued to rise & primary lead premium narrowed; lead prices under pressure at highs [SMM Lead Morning Meeting Summary]

Futures:

Overnight, the LME lead 3M contract opened at $1,909.5/mt on September 7, consolidated at highs in the $1,909-1,916/mt range during Asian trading hours, and hit an intraday high of $1,916.0/mt. After entering the overlapping European and US trading hours, it quickly plunged into negative territory, dipping to a low of $1,896.5/mt. The contract traded in a range of $1,896.5-1,916.0/mt throughout the day, with a slight pullback near the close, eventually settling at $1,899.5/mt, down $7.0/mt or 0.37% from the previous trading day's closing price. Trading volume stood at 4,282 lots, and open interest was 172,291 lots.

Overnight, the SHFE lead 2610 contract moved downwards after a higher opening in the night session and drifted lower. It opened at 16,160 yuan/mt, briefly shot up to 16,185 yuan/mt after the open, then its center continued to move lower, dipping to 16,070 yuan/mt in the early morning, and eventually settled at 16,080 yuan/mt, down 130 yuan/mt or 0.80% from the previous trading day's closing price, erasing all gains from the daytime session. Night session trading volume was 23,472 lots, and open interest was 65,309 lots.

On the macro front:

Overseas, on Monday, dragged by a stronger yen, the US dollar index fell under pressure and lost the 99 mark, closing down 0.26% at 98.91. USD/JPY briefly approached 154, hitting a new low since February 23. Yesterday was the US Labor Day holiday, with US stock and Treasury spot markets closed. On the geopolitical front, over the weekend, the US and Iran attacked each other's oil tankers again. On Monday, Saudi Aramco's oil facilities were attacked, though the Houthis had not claimed responsibility yet. Iran simultaneously unveiled a new-type missile, and Ukraine continued to attack oil refining and petroleum processing facilities in Russia's Yaroslavl and other regions. Driven by supply disruption concerns, international oil prices shot up after a higher opening, with WTI crude oil closing up 1.62% at $90.76/barrel. The Panama Canal warned of possible reductions in transit capacity, with daily transits potentially cut from 32 to 27.

In China, the PBOC continued to increase its gold holdings in August, setting a new monthly record for the current gold-buying cycle. On the industrial front, the MIIT issued the "15th Five-Year Plan for the Development of the Information and Communication Industry." Two departments jointly issued a notice on promoting automakers to standardize supplier payment and optimize payment term management. The NDRC arranged to increase the scale of Xinjiang coal outbound shipments. On the policy and industry front, the Ministry of Industry and Information Technology issued the "15th Five-Year Plan for the Development of the Information and Communication Industry"; the Economic Operation Adjustment Bureau of the National Development and Reform Commission organized and deployed efforts to increase the scale of Xinjiang coal outbound shipments; two departments jointly issued a notice on promoting automakers to standardize supplier payment and optimize payment term management.

Spot fundamentals:

Yesterday, the SMM #1 lead average price rose by 50 yuan/mt. For primary lead, suppliers sold as usual and maintained small premiums, but quotes for EXW cargoes from primary lead smelters eased slightly. Premiums narrowed in south China, with mainstream production areas quoting at premiums of 0-25 yuan/mt against the SMM #1 lead average price. Supplier sentiment was divided, with some holding prices firm due to limited circulating cargoes, while others actively sold to cash in, resulting in notable regional quote divergence. For secondary lead, market circulating supply was also limited, with secondary refined lead from mainstream production areas offered at discounts of 100-50 yuan/mt against the SMM #1 lead average price. Downstream, enterprises made few inquiries, with some bargaining for deeper discounts, and purchases were mainly based on demand and long-term contracts. Overall transactions were sluggish, with no significant improvement yet.

Inventory: As of September 7, total social inventory of SMM lead ingot across five regions reached 74,700 mt, up 3,800 mt from August 31 and up 3,600 mt from September 3. LME lead inventory stood at 388,450 mt, down 3,525 mt from the previous trading day; SHFE lead ingot warrant inventory totaled 57,742 mt, unchanged from the previous trading day.

Today's lead price forecast:

Overnight, SHFE and LME lead both fell with increased positions. SHFE lead gave back all daytime session gains in the night session, pulling back to the 16,000 level, while LME lead barely held the middle Bollinger Band. Futures turned weaker in the short term, and today's spot lead prices may edge lower under pressure along with futures, consolidating on a subdued note. However, the US dollar losing the 99 level and LME copper hitting a record high still support sentiment in the nonferrous metals sector. Additionally, SHFE lead's KDJ is deeply oversold, suggesting technical rebound demand, and primary lead supply remains tight, with some smelters halting quotes due to low inventory and LME inventory continuing to destock, providing a floor underneath and limiting deep downside room. On the spot side, supplier sentiment is divided, primary lead premiums are narrowing, secondary refined lead maintains discounts, and downstream purchases are based on demand and long-term contracts with sluggish transactions, making rebounds equally weak. Today's spot lead prices are expected to consolidate on a subdued note at high levels with slight pressure, with limited upside and downside room. Focus on whether SHFE lead holds the 16,000 level, sentiment transmission from the US dollar and LME nonferrous metals sector after US trading resumes, and whether spot premiums and actual transactions can follow through.