Overnight Lead Prices Fluctuated Downward, Downstream Demand Leaned Towards Primary Lead[SMM Lead Morning Comment]

Overnight, LME lead opened at $2,017.5/mt, peaked at $2,024/mt during the Asian session, and then fluctuated downward. During the European session, it weakened to a low of $1,982.5/mt before rebounding, facing resistance at $2,010/mt and slightly consolidating, finally closing at $2,003/mt, down $10/mt, a decrease of 0.5%.

Overnight, the most-traded SHFE lead 2501 contract opened at 16,925 yuan/mt, briefly touched a high of 16,940 yuan/mt, then dipped to 16,855 yuan/mt, and finally closed at 16,880 yuan/mt, down 95 yuan/mt, a decrease of 0.56%.

Macro side, the US dollar index fluctuated at a high level, and the US Fed remained slow and cautious on the path of interest rate cuts.

Fundamentals side, since mid-October, air pollution has continuously disrupted refined lead supply after heating started in north China. Secondary lead smelters' production was once again affected by the third round of warnings issued in Hebei, Henan, and Anhui. Production restrictions led to a tight supply of secondary refined lead in the market, with smelters' ex-factory prices remaining firm, quoted at premiums of 0-150 yuan/mt against the SMM 1# lead average price. Downstream enterprises' rigid demand leaned more towards primary lead. This week, delivery sources re-entered the market, and downstream enterprises purchased as needed, leading to a nearly 20,000 mt weekly decline in social inventory of lead ingots. Moving forward, we still need to monitor the lifting of production restrictions on lead smelters in smog-affected areas.