Fundamentals show a backwardation structure, and lead prices will consolidate in the short term [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $1,927/mt, and under pressure from a stronger US dollar index, LME lead drifted lower throughout the day. Notably, entering the European session, LME lead declined in steps, hitting a low of $1,900/mt, the lowest level in nearly two weeks, before finally settling at $1,904.5/mt, down 1.32%.

Overnight, the most-traded SHFE lead 2611 contract opened at 16,200 yuan/mt. With the National Day holiday approaching, traders gradually exited positions, and open interest in SHFE lead further declined. At the start of trading, SHFE lead found support at the 20-day moving average, and combined with lead ingot inventory drawdowns, SHFE lead climbed back above 16,200 yuan/mt, eventually settling at 16,225 yuan/mt, up 0.19%; open interest was 67,945 lots, down 771 lots from the previous trading day.

On the macro front:

Chinese market: The State Council executive meeting studied the introduction of policy measures to stabilize the real estate market and promote employment and income growth. The PBOC and eight other departments launched 19 financial measures to support the expansion and quality improvement of the service sector, proposing to guide financial institutions to comprehensively use diversified tools such as credit, bonds, and equity to support the development of "AI + software."

Markets outside China: According to relevant reports, the US and Iran recently held talks with mediators, focusing on a revised version of Iran's proposed "7-day plan"; Trump said US and Iranian representatives have exchanged information through mediators. Iran's Supreme Leader said the era of Western interference has ended. US media reported that Trump is willing to ease sanctions on Iran in exchange for progress on the nuclear issue, which he denied. Iran was revealed to have agreed to suspend uranium enrichment. The key Saudi oil pipeline that was shut down two weeks ago due to an attack has resumed exports.

:

In the lead spot market yesterday, circulating cargoes in Jiangsu, Zhejiang, and Shanghai were tight, and market quotations were scarce. Meanwhile, downstream enterprises had mostly completed pre-holiday stockpiling, and wait-and-see sentiment was strong after lead prices fell. Most suppliers mainly sold primary lead cargoes self-picked up from production site. Currently, current-month cargoes are nearly sold out, with pre-sales of October cargoes dominating. Mainstream production area quotations were at premiums of 0-50 yuan/mt against the SMM #1 lead average price ex-works. In secondary lead, smelters sold cargoes as needed, but low-price selling reluctance remained. Mainstream production area secondary refined lead quotations were at discounts of 100-0 yuan/mt against the SMM #1 lead average price ex-works.

Inventory: As of September 28, LME lead inventory stood at 358,700 mt, down 3,825 mt from the previous trading day; total SHFE lead ingot warrant inventory was 44,919 mt, down 298 mt from the previous trading day. Total SMM lead ingot social inventory across five regions reached 52,400 mt, down 13,300 mt from September 21 and down 5,300 mt from September 24.

Today's lead price forecast:

With the National Day holiday approaching, lead-acid battery enterprises have largely completed their pre-holiday stockpiling. Before the holiday, downstream enterprises mainly picked up goods on an as-needed basis, and lead ingot inventories in social warehouses fell to a seven-month low, providing strong support for lead prices. However, reduced downstream purchasing diverged from suppliers' willingness to clear inventory before the holiday and pre-sell National Day production, weakening spot lead market transactions and reversing the high-premium deals seen over the previous two weeks. In addition, primary lead smelters in central and northern China are gradually resuming production after maintenance, and expectations of incoming imported lead suggest that lead prices will likely remain under slight downward pressure in the short term.

Data source statement: All data other than public information are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only and do not constitute decision-making advice.