Macro boost combined with consumption expectations, lead prices continue to fluctuate upward [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,156/mt, rose slightly during the Asian session, and consolidated around the daily moving average in the European session, reaching a high of $2,167/mt before fluctuating downward, finally closing at $2,153/mt, up $3/mt, an increase of 0.14%.

Overnight, SHFE lead was closed due to the National Day holiday. During the holiday week (9.30-10.4), LME lead opened at $2,126/mt and closed at $2,150/mt, up $38.5/mt, an increase of 1.82%.

Macro side, during the holiday, on October 4, the US Department of Labor released the latest non-farm payrolls report. The US September non-farm payrolls data exceeded expectations, weakening market enthusiasm for the US Fed to cut interest rates by 50 basis points in October. The Middle East situation escalated again—on the evening of October 1 local time, Iran launched a large-scale ballistic missile attack on Israel.

Fundamentals side, the spread between futures and spot prices for lead ingots widened, with some regions quoting ex-factory prices at discounts of 300-250 yuan/mt against the SHFE 2410 contract, increasing the willingness of holders to deliver to warehouses. Pre-holiday, there were already actions to transfer and deliver to warehouses, causing social inventory of lead ingots to stop declining and start rising. Except for a few battery companies that took early holidays, most lead-acid battery companies completed their holiday stocking and entered a 2-5 day holiday, resuming production in the latter half of the week. However, compared to the same period in 2023, downstream pre-holiday stocking enthusiasm was relatively low, and most lead smelters did not pre-sell most of their holiday production as in previous years. Spot market supply was relatively ample, and post-holiday attention is needed on macro policy boosts, downstream consumption, and restocking to see if it alleviates the inventory pressure accumulated during the holiday.