Year-End Output Surge in Battery Producers VS Expected Supply Tightening: Lead Prices Likely to Fluctuate at High Levels [SMM Lead Morning Comment Dec 18]

Overnight, LME lead opened higher at $2,004.5/mt, briefly touching a high of $2,012/mt during the Asian session before fluctuating downward. In the European session, it continued to weaken, hitting a low of $1,983/mt and finally closing at $1,985/mt, down 0.5%.

Overnight, the most-traded SHFE lead 2501 contract opened at a low of 17,595 yuan/mt, fluctuated upward in early trading to a high of 17,775 yuan/mt, and then dropped back slightly and fluctuated rangebound, closing at 17,665 yuan/mt, up 0.91%.

Macro side, US November retail sales month-on-month rose by 0.7%, the highest since September, exceeding market expectations of 0.5% growth. China's State-owned Assets Supervision and Administration Commission issued the "Opinions on Improving and Strengthening Market Value Management of Central State-Owned Enterprises' Publicly Listed Firms." China Securities Depository and Clearing Corporation announced that starting January 1, 2025, it will halve the dividend and interest distribution fees for A-shares in the Shanghai and Shenzhen markets.

Fundamentals, as year-end approaches, some large battery producers are ramping up production, with the overall operating rate of lead-acid batteries trending upward. Coupled with frequent smog alerts recently, multiple regions have issued Level 2 warnings, prompting secondary lead smelters in Anhui, Shandong, and other areas to halt production, significantly tightening supply. Lead prices are expected to fluctuate at high levels in the short term.