Futures:
Last Friday, the LME lead 3M contract opened at $1,908.0/mt on September 18, drifted higher during Asian and European trading hours, hit an intraday high of $1,922.0/mt in the evening, and finally settled at $1,921.0/mt, up $10.0/mt or 0.52% from the previous trading day's closing price. It traded in a range of $1,907.5-1,922.0/mt throughout the day, with trading volume of 8,596 lots and open interest of 184,569 lots. The daily candlestick closed bullish for another session, holding above the $1,900/mt level and hitting a fresh one-month high.
Last Friday, the SHFE lead 2611 contract opened at 16,300 yuan/mt, shot up quickly after the open to an intraday high of 16,450 yuan/mt before retreating after resistance, then consolidated in the 16,350-16,380 yuan/mt range and finally settled at 16,355 yuan/mt, up 30 yuan/mt or 0.18% from the previous trading day's closing price, with trading volume of 49,534 lots and open interest of 70,001 lots.
Last Friday evening, the most-traded SHFE lead contract officially rolled over to the SHFE lead 2611 contract. During the day, the SHFE lead 2610 contract saw trading volume of 28,299 lots and open interest of 34,270 lots. Overall, SHFE and LME remained firm on Friday, with LME lead hitting a fresh rebound high in nearly a month, while SHFE lead's old and new most-traded contracts retreated after rapid rises in succession, with overbought indicators and insufficient volume follow-through.
On the macro front:
Overseas, after the US Fed's rate hike landed, the market continued to digest the tightening path. Last Friday, the US dollar index retreated after a rapid rise and consolidated in a narrow range, closing down 0.02% at 100.21. Fed official Kashkari said inflation remains too high and is not solely driven by oil prices. Today at 18:30, Chicago Fed President and 2027 FOMC voter Goolsbee will deliver a speech. In the Middle East, negotiation signals and hardline signals coexist: Trump said he is open to meeting with the Iranian president during the UN General Assembly, Qatar said the US hopes to reach an agreement with Iran, Trump will speak at the UN General Assembly on Tuesday, and the Iranian president will speak on Wednesday. Affected by US-Iran negotiation signals and progress in repairing Saudi oil pipelines, geopolitical risk premium was pared back. Last Friday, international oil prices pulled back, with WTI closing down 1.31% at $95.26/bbl and Brent down 0.86% at $99.72/bbl, falling back below the $100 mark. Meanwhile, Europe's energy crunch persists, with France planning to push for a G7 energy meeting and considering releasing strategic reserves.
In China, the Ministry of Finance released data showing that national general public budget revenue from January to August totaled 15,663.3 billion yuan, up 5.7% YoY, with stamp duty on securities transactions up 82% YoY. In August, total electricity consumption nationwide exceeded 1 trillion kWh again, with power load hitting a record high, reflecting industrial production and economic activity. The State Administration for Market Regulation said it will use a policy package to rectify "involution-style" competition and crack down on malicious low-price competition. The Ministry of Housing and Urban-Rural Development said the supply-demand relationship in the real estate market has undergone major changes and that real estate has entered a stock era.
On China-US economic and trade relations, Vice Premier He Lifeng led a delegation to the US from September 19 to 23. China-US economic and trade consultations have begun in New York, and the Ministry of Foreign Affairs said the two sides are maintaining communication on head-of-state interaction within the year. In response to the US tariff hike on third countries importing Russian oil and gas and the EU's proposed restrictions on imports of Chinese hybrid vehicles, the Ministry of Commerce made separate responses.
Spot fundamentals:
Last Friday, the SMM #1 lead price rose by 300 yuan/mt from the previous trading day. SHFE lead continued its strong trend, suppliers maintained firm price sentiment, and spot market supply remained tight. For primary lead, mainstream production areas quoted premiums of 50-200 yuan/mt against the SMM #1 lead average price ex-works. Regional divergence emerged: Henan current-month spot remained tight, with suppliers mostly pre-selling October cargoes and market quotes relatively chaotic. Spot orders were quoted at discounts of 50-0 yuan/mt against the SHFE lead 2610 contract, or discounts of 50-0 yuan/mt against the SHFE lead 2611 contract ex-works, with next-month cargo transactions lackluster. In Hunan, smelters mainly supplied through long-term contracts, with some enterprises limiting sales volumes, and current-month cargoes were quoted at a premium of 200 yuan/mt against the SMM #1 lead average price ex-works. In Jiangxi and Anhui, spot orders were quoted at premiums of 100-150 yuan/mt against the SMM #1 lead average price. For secondary lead, as lead prices strengthened and smelter losses narrowed, selling enthusiasm increased. Mainstream production areas quoted secondary refined lead at discounts of 100 yuan/mt to premiums of 50 yuan/mt against the SMM #1 lead average price ex-works. On the downstream side, current-month spot supply was limited and generally quoted at high premiums. Downstream enterprises showed strong wait-and-see sentiment and temporarily slowed purchases. Aside from a small portion of just-in-time procurement, they mainly consumed their own inventories. The spot order market was quiet on both sides, and overall trading activity weakened significantly from the beginning of the week.
Inventory: As of September 18, LME lead inventory stood at 373,625 mt, down 1,975 mt from the previous trading day. SHFE lead ingot warrant inventory totaled 53,115 mt, down 6,123 mt from the previous trading day.
Lead price forecast for today:
After the US Fed's rate hike bearishness was fully priced in, the US dollar retreated from highs over the weekend and oil prices gave back gains. Peripheral sentiment marginally eased, and China's lead price trading center returned to fundamentals. Combined with continued social inventory drawdowns, tight current-month spot supply, and widespread price-holding by suppliers and primary and secondary smelters, spot lead prices still have support below. However, last Friday SHFE lead retreated after rapid rise near previous highs, short-term indicators entered overbought territory, and with current high spot premiums making downstream enterprises cautious about chasing higher prices and spot order transactions weakening, lead price upside momentum is limited. Spot lead prices today are expected to consolidate at high levels with the futures market and still have room for slight gains.
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