Short-term Lead Trading Anchors: Raw Material Supply? Consumption Expectations? [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,054/mt. During the day, with the backdrop of lead ingot inventory reduction, LME lead fluctuated upward. However, the US dollar index continued to strengthen, reaching a nearly two-month high of 104.16, which hindered LME lead's upward movement, causing it to fall back to around $2,055/mt. By the end of the session, LME lead recovered some of its gains, finally closing at $2,078/mt, up 1.39%.

Overnight, SHFE lead warehouse warrant inventory continued its slight downward trend. The most-traded SHFE lead 2411 contract opened higher at 16,810 yuan/mt, but market news on the fundamentals was mediocre, leading SHFE lead to move downwards after a higher opening. Especially in the latter part of the trading session, there was a stalemate between bulls and bears, with SHFE lead consolidating around 16,750 yuan/mt for a long time, eventually closing at 16,755 yuan/mt, down 0.18%. Its open interest reached 30,241 lots, a decrease of 1,212 lots from the previous trading day. Recently, the open interest of the SHFE lead 2411 contract has been gradually decreasing and shifting to the 2412 contract. Attention should be paid to the rollover of the most-traded contract.

Macro side, the IMF maintained its forecast for global economic growth this year at 3.2%, but lowered next year's global economic growth forecast to 3.2%, warning that risks such as war conflicts and trade protectionism are intensifying, with significant downside risks. The US election may lead to a repeat of the August sell-off in the market.

Fundamentals side, in October, lead ingot showed a trend of both supply and demand increasing, and the supply-demand mismatch in the market was not prominent, so lead prices may continue to consolidate. Currently, there are still issues with tight raw material supply, such as strong cost support from battery scrap. At the same time, lead concentrate will be stockpiled for the winter period, and unexpected shutdowns at domestic and international lead-zinc mines are occurring, making it difficult for smelters to negotiate TCs. Additionally, the seasonal recovery in lead consumption is limited, making it difficult for lead ingots to be destocked in large quantities in the short term.