Futures:
The LME lead 3M contract opened at $1,936.5/mt on September 23, shot up in the Asian session before consolidating lower, consolidated at lows during European trading hours, dipped again in the evening to a low of $1,915.5/mt, rebounded slightly in the early morning, and finally closed at $1,923.0/mt, down $9.0/mt or 0.47% from the previous trading day's closing price. The contract traded in a range of $1,915.5-1,939.0/mt throughout the day, with volume of 5,968 lots and open interest of 190,280 lots, forming a bearish candlestick on the daily chart.
The SHFE lead 2611 contract opened at 16,295 yuan/mt in the night session, shot up briefly after the open to a high of 16,380 yuan/mt, then moved sideways in a narrow range of 16,285-16,380 yuan/mt, and finally closed at 16,320 yuan/mt, down 15 yuan/mt or 0.09% from the previous trading day's closing price, with volume of 26,066 lots and open interest of 72,177 lots.
On the macro front:
Overseas: US reflation and rate hike concerns reignited: the September services PMI rose to a nearly five-year high, and the manufacturing PMI rose to a more than four-year high. The Middle East situation remained volatile and oil prices rebounded: a cargo ship in the Strait of Hormuz was attacked and caught fire, Iran said it would not reopen the strait until conditions were met, and US-Iran talks made no breakthrough. WTI and Brent crude oil surged 2.94% and 4.88% respectively to $92.11/bbl and $103.42/bbl, reigniting inflation expectations. US Fed Governor Barr said inflation risks have risen and further rate hikes may be necessary. The US dollar index broke above the 101 level, rising 0.6% to 101.14. US Treasuries were sold off, with the 10-year yield rising above 5.1% and the 5-year yield breaking above 5% for the first time since 2007.
China: President Xi Jinping arrived in Washington for a state visit to the US, and Trump greeted him at the airport. The progress of the China-US meeting is a key focus for the market. The central bank provided liquidity support ahead of the holiday: it conducted 800 billion yuan of 1-year MLF operations today, and will conduct overnight reverse repos from September 28 to October 8, with a daily cap of 1 trillion yuan.
Spot fundamentals:
Yesterday, SMM #1 lead fell 50 yuan/mt from the previous trading day. With positive fundamentals largely priced in, SHFE lead gave back some gains, while market circulating supply was limited and warrant cargo quotations held steady premiums from yesterday. Quotations for cargoes self-picked up from primary lead smelters weakened further, with mainstream production-area quotations at premiums of 50-100 yuan/mt against the SMM #1 lead average price ex-works. The number of high-premium offers decreased. By region, smelters in Henan focused on delivering previous orders, and suppliers quoted at discounts of 50-20 yuan/mt against the SHFE lead 2611 contract ex-works, with weak transactions for October cargoes. In Hunan, smelter quotations saw premiums decline day by day, with spot orders quoted at premiums of 50-100 yuan/mt against the SMM #1 lead average price ex-works, and only a small amount of just-in-time procurement was made. In Jiangxi and Anhui, smelter spot order quotations were at premiums of 100-120 yuan/mt against the SMM #1 lead average price ex-works. For secondary lead, smelters sold as available, with regional supply differences. Mainstream production areas quoted secondary refined lead at discounts of 100 yuan/mt to premiums of 25 yuan/mt against the SMM #1 lead average price, ex-works. With the Mid-Autumn Festival holiday approaching, downstream enterprises have largely wrapped up pre-holiday stockpiling, mostly digesting inventories, while some continued to wait and see or hold off until new monthly long-term contracts begin. Overall spot market transactions weakened.
Inventory: As of September 23, LME lead inventory stood at 365,925 mt, down 3,775 mt from the previous trading day. Total SHFE lead ingot warrant inventory was 45,342 mt, down 2,118 mt from the previous trading day.
Today's lead price forecast:
Overall, a strong US dollar overseas and rising rate hike expectations weighed on nonferrous metals sentiment. Futures prices faced resistance at previous highs and pulled back on shrinking volume. Domestically, downstream pre-holiday stockpiling in the spot market is nearing its end, spot transactions have weakened, and premiums have also loosened somewhat. However, inventory continued to decline and current-month supply remained tight, providing support below prices. Today, spot lead prices are expected to pull back slightly along with futures, staying high and consolidating on a subdued note before the holiday. Attention should be paid to whether futures prices can stop falling during the session, progress in China-US talks, and downstream dip-buying as lead prices pull back.
![SHFE lead 2611 contract meets resistance at previous high, volume shrinks and open interest declines as it shifts to high-level consolidation [SMM Lead Morning News]](https://imgqn.smm.cn/usercenter/mfCMp20251217171721.jpeg)
![SHFE lead 2611 contract overbought pullback, closing down 0.58% [Lead Futures Brief Comment]](https://imgqn.smm.cn/usercenter/LCtEk20251217171721.jpeg)
