Downstream consumption relatively improved; short-term decline in secondary lead production may cause lead prices to fluctuate upward [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,049/mt. During the Asian session, it fluctuated upward to a high of $2,070.5/mt. However, due to the US dollar index's rebound and longs reducing positions, LME lead plunged during the European session, hitting a low of $2,030/mt at the close and finally settling at $2,037/mt, down 0.07%.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,810 yuan/mt. It initially fell to a low of 16,770 yuan/mt before rebounding, reaching a high of 16,875 yuan/mt at the close and finally settling at 16,830 yuan/mt, up 0.18%.

Macro side, the Standing Committee of the National People's Congress reviewed the State Council's proposal to increase the local government debt limit to replace existing implicit debts. According to preliminary monthly data from the China Passenger Car Association, wholesale sales of new energy passenger vehicles in October were estimated at 1.4 million units, up 58% YoY and 14% MoM; Tesla's sales in China declined. The Ministry of Commerce stated that to protect the development interests of the EV industry and global green transition cooperation, China has decided to file a lawsuit against the EU's final anti-subsidy measures.

Fundamentals, the smog alert in Henan has been lifted, and vehicle transportation has returned to normal. In Anhui, an orange alert for air pollution was issued last Friday, and some secondary lead smelters have suspended production for maintenance. The lead-acid battery market consumption has relatively improved, and producers are more willing to operate. Notably, the automotive battery sector has seen a seasonal increase in domestic vehicle and replacement demand, along with a recovery in export orders. The operating rate of major enterprises' production lines has generally increased to 80-100%. In the short term, lead prices may fluctuate upward.