Futures:
Overnight, the LME lead 3M contract opened at $1,880.5/mt on September 15, dipped to $1,870.0/mt during European trading hours, briefly rebounded to around $1,880/mt in the evening, then pulled back again in the early morning hours, ultimately settling at $1,875.5/mt, down $4.5/mt or 0.24% from the previous trading day's closing price. The full-day trading range was $1,870.0-1,882.5/mt, with volume of 5,525 lots, down 4,199 lots, and open interest of 174,481 lots, down 999 lots. The daily candlestick closed as a small bearish candlestick.
Overnight, the SHFE lead 2610 contract opened at 15,830 yuan/mt in the night session, shot up briefly after the open before consolidating lower, moving sideways in a narrow range at 15,755-15,800 yuan/mt, and ultimately settled at 15,780 yuan/mt, edging up 5 yuan/mt or 0.03% from the previous trading day's closing price. Volume was 25,598 lots, and open interest was 62,815 lots.
Overall, both SHFE and LME lead have shifted from the earlier sharp breakdown to consolidating on a weak note at low levels. In addition, yesterday was the last trading day for the SHFE lead 2609 contract, and delivery begins today, with funds continuing to migrate to the 2611 contract. Attention should be paid to the convergence of nearby contracts and the disruption from the most-traded contract rollover.
On the macro front:
Overseas, market focus was concentrated on this week's super central bank week. At 02:00 in the early morning following today, the US Fed will release the FOMC rate decision and Summary of Economic Projections, and at 02:30 Fed Chairman Warsh will hold a press conference. Market bets on a 25bp rate hike in September had already risen to around 90%, and wait-and-see sentiment was thick during the daytime session. On Tuesday, risk-off sentiment and expectations of rising interest rates continued to dominate, with the US dollar and real yields both strengthening. The US dollar index closed up 0.13% at 99.613, a new high since the start of the month. The benchmark 10-year Treasury yield touched 5.04% intraday, the highest since 2007. On geopolitics and inflation, supply concerns over the "two straits" in the Middle East intensified: after the attack on Saudi Arabia's east-west crude pipeline, crude loading operations at Yanbu, the largest port on the Red Sea, were suspended. Saudi Arabia had notified some European refiners to cancel their September-loading crude cargoes. Supply concerns drove international oil prices sharply higher, with WTI crude breaking above $102/bbl intraday and closing up 3.01% at $100.96/bbl, while Brent crude closed up 1.74% at $104.96/bbl. Elevated oil prices further reinforced inflation and rate hike expectations. In addition, the US Senate Majority Leader said he was "willing to explore" an export ban on diesel.
In China, August economic data was released. Industrial value added above designated size rose 5.2% YoY, but the demand side remained weak. Total retail sales rose only 0.4% YoY. Fixed asset investment fell 7.2% YoY in January-August, and real estate development investment fell 19.9% YoY. The property and consumption chains remained weak, weighing on downstream demand expectations for nonferrous metals. CISA stated it would strictly implement production controls and adhere to self-discipline in controlling production and reducing inventory. Iran's foreign minister visited China today. In financial markets, A-shares weakened on shrinking turnover, with combined turnover on the two exchanges hitting a new low for the year. More than 4,300 stocks fell, and only a few sectors such as minor metals bucked the trend. Hong Kong-listed copper mining and gold sectors weakened, and overall market risk appetite remained low.
Spot fundamentals:
In terms of primary lead supply, SHFE lead consolidated on a subdued note. Primary lead smelters maintained their stance of holding prices firm, and ex-works cargoes of electrolytic lead were particularly resilient. Regional divergence was evident: primary lead smelters in Henan mainly delivered against long-term contracts, spot availability decreased, and suppliers narrowed their discount quotations. Primary lead smelters in south China quoted spot orders at premiums of 25-80 yuan/mt over the SMM #1 lead average price, ex-works. Overall circulating cargoes tightened, and primary lead suppliers held prices firm when selling, with some cargoes already pre-sold for delivery after September 25. In terms of secondary lead supply, secondary lead smelters showed strong reluctance to sell at low prices. Some secondary refined lead cargoes from mainstream production areas were quoted at premiums of 0-50 yuan/mt over the SMM #1 lead average price, ex-works. On the downstream demand side, with lead prices weak, downstream enterprises bought the dip and actively made inquiries, boosting spot trade activity. Some downstream enterprises began building inventory ahead of the Mid-Autumn Festival and National Day holidays, and overall transactions were moderate.
Inventory: As of September 15, LME lead inventory stood at 379,850 mt, up 1,325 mt from the previous trading day. Total SHFE lead ingot warrant inventory was 60,096 mt, down 301 mt from the previous trading day.
Lead price forecast for today:
Overnight, SHFE and LME continued to consolidate on a weak note. Combined with a stronger US dollar, rising rate hike expectations, and the US Fed meeting scheduled for early tomorrow morning, futures remained under pressure. In the spot market, circulating cargoes tightened, and suppliers as well as primary and secondary smelters generally held prices firm and were reluctant to sell. Some secondary refined lead cargoes shifted to premiums. Downstream users restocked on dips and began building inventory for the Mid-Autumn Festival and National Day holidays, with improving transactions, which provided support to the downside of lead prices. Today, spot lead prices are expected to consolidate on a subdued note at low levels, with the decline slowing. Smelters holding prices firm and dip-buying restocking are expected to limit downside room. Focus should be on the transmission of the US Fed meeting to LME sentiment, whether SHFE lead holds or loses the lower Bollinger Band, and the sustainability of spot price firmness and transactions.
![LME lead narrows losses & SHFE lead holds lower bound in night session, lead prices consolidate on a weak note [SMM Lead Morning Update]](https://imgqn.smm.cn/usercenter/ojSqv20251217171720.jpeg)
![Spot cargo holds prices firm to support the market, SHFE lead consolidates on a weak note and closes down 0.32% [Lead Futures Brief Comment]](https://imgqn.smm.cn/usercenter/lIHfM20251217171721.jpeg)
