Lead Prices Hold High Above 16,000 in Stalemate, Awaiting Directional Choice [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, the LME lead 3M contract opened at $1,910.0/mt on September 10, shot up to $1,918.0/mt during Asian trading hours, touching the upper Bollinger Band again but failing to break through. It consolidated lower during the overlapping European and US sessions, dipped to an intraday low of $1,898.5/mt in the early morning, barely holding the middle Bollinger Band, and finally settled at $1,900.5/mt, down $8.5/mt or 0.45% from the previous trading day's closing price. The full-day trading range was $1,898.5-1,918.0/mt, with volume of 7,105 lots, open interest of 169,509 lots, a decrease of 3,429 lots, and a bearish candlestick on the daily chart.

Overnight, the SHFE lead 2610 contract opened at 16,100 yuan/mt in the night session, quickly rose after the open to a high of 16,265 yuan/mt, then consolidated lower, dipped to 16,075 yuan/mt in the early morning, and rebounded slightly near the close to settle at 16,165 yuan/mt, down 5 yuan/mt or 0.03% from the previous trading day's closing price. Night session volume was 37,560 lots, with open interest of 64,060 lots, an increase of 985 lots.

Overall, SHFE and LME showed slightly divergent paces: LME lead was repeatedly blocked at the upper Bollinger Band, with a bearish KDJ crossover and weakening rebound momentum, while SHFE lead briefly bucked the trend and shot up in the night session but pulled back under pressure from LME weakness and overhead selling, closing with a long upper shadow.

On the macro front:

Outside China, rate hike expectations heated up overnight, with both the US dollar and US Treasuries strengthening. US August PPI came in at 5.4% YoY, above the expected 5.3%, with the prior reading revised up from 4.70% to 4.8%, and market bets on a September Fed rate hike rose to 70%. Boosted by this, the US dollar index reclaimed the 99 level, closing up 0.28% at 99.08, while the 10-year US Treasury yield rose nearly 12 bp to 4.967%, a fresh near three-year high. Geopolitically, shipping attacks in the Red Sea continued to escalate, with Houthi forces seizing the Red Sea coastal city of Mokha and the strategic Hanish Islands. International oil prices rose for a fourth consecutive day, with WTI crude breaking above $100/bbl, closing up 6.73% at $100.59, a near five-month high. US August CPI and core CPI will be released tonight at 20:30, with the IEA monthly oil market report at 16:00 and the University of Michigan consumer sentiment index preliminary reading at 22:00 also in focus.

In China, the "15th Five-Year Plan" for building a financial powerhouse was officially released; the National Development and Reform Commission (NDRC) issued a notice on cost accounting for low-price disorderly competition in key industrial products to regulate pricing order; the financial regulator stated it would vigorously crack down on "price wars" and similar practices; China's August NEV production and sales rose 18.9% and 17.8% YoY, respectively. President Xi Jinping will travel to New Delhi, India, from September 12 to 13 to attend the 18th BRICS Leaders' Summit. The central bank will conduct overnight reverse repo operations from September 14 to 17, using a fixed rate and quantity tender, with daily operation volume not exceeding 600 billion yuan.

Spot fundamentals:

Yesterday, SMM #1 lead prices were flat. For primary lead, suppliers generally held prices firm when selling, with firmer prices in north China than in south China. Mainstream production-area primary lead EXW quotations were at premiums of 0-50 yuan/mt over the SMM #1 lead average price. Regionally, Henan mainly delivered long-term contracts, with some discounts narrowing. Hunan smelters had limited inventory, and sentiment to hold prices firm eased slightly after lead prices rebounded. Jiangxi and Anhui maintained premiums of 80-100 yuan/mt. For secondary lead, secondary lead smelters sold as market conditions allowed. The north-south divergence widened, with discounts showing a "south widening, north narrowing" pattern. Discounts in south China were larger than in north China. Mainstream production-area secondary refined lead was quoted at discounts of 175-0 yuan/mt against the SMM #1 lead average price, EXW. Downstream, enterprises mostly purchased through long-term contracts, with spot orders only for just-in-time needs. Some just-in-time procurement shifted to lower-priced secondary lead. Overall market transactions were average, with no significant improvement in trading yet.

Inventory: As of September 10, total SMM lead ingot social inventory across five regions reached 74,100 mt, up 3,000 mt from September 3 and down about 600 mt from September 7. LME lead inventory stood at 382,375 mt, down 2,075 mt from the previous trading day. SHFE lead ingot warrant inventory totaled 58,291 mt, unchanged from the previous trading day.

Today's lead price forecast:

Overnight, LME lead trading volume expanded, and bulls took profits and exited. LME lead prices have faced resistance after multiple days of attempted rallies, with rebound momentum weakening. SHFE lead shot up against the trend at one point during the night session but pulled back under pressure from the LME, lacking upward momentum, though it still held the 16,000 yuan/mt level. In the spot market, the north-south divergence in selling by lead smelters and traders widened, with quotation discounts widening in the south and narrowing in the north. Meanwhile, downstream enterprises purchased as needed, with some just-in-time procurement favoring lower-priced secondary lead. Overall market transactions showed no significant improvement. In summary, influenced by primary lead price support, widening secondary refined lead discounts, and weak downstream demand, spot lead prices are expected to stabilize at highs and move sideways today, with limited upside and downside room.