Bullish and Bearish Factors Coexist in Domestic and Overseas Markets; Lead Prices Are Expected to Remain in Consolidation [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,937/mt. Geopolitical tensions in the Middle East persisted, but the impact of bearish news weakened. Meanwhile, the US dollar index pulled back after a surge, and base metals rebounded relatively, with LME lead gradually recouping the previous day’s losses and finally closing at $1,962/mt, up 1.32%.

Overnight, the most-traded SHFE lead 2604 contract opened at 16,775 yuan/mt. As the tug-of-war between domestic supply and demand continued, SHFE lead maintained high-level consolidation, fluctuating between 16,785-16,835 yuan/mt for most of the session, before finally closing at 16,860 yuan/mt, up 0.45%. Its open interest rose to 60,191 lots, an increase of 415 lots from the previous trading day.

On the macro front:

The US Senate failed to pass a vote to halt Trump’s strikes on Iran. The US Secretary of Defense said a US-Iran conflict could last eight weeks or longer; Iran denied seeking negotiations; Wang Yi said China would send a special envoy on the Middle East issue to the region for mediation. Iran confirmed candidates for Supreme Leader; Israel said any new leader would become a “target for elimination.” US ammunition inventories are critically low, and Trump was set to convene major defense contractors at the White House this week to discuss accelerating weapons production. After the Strait of Hormuz, an oil tanker was also bombed in the Mediterranean. The Middle East conflict led to flight suspensions in Dubai; 20% of global gold logistics may be disrupted, with silver also impacted. In addition, US Treasury Secretary Bessent said a 15% global tariff may be implemented this week, pledged to escort shipping in the Persian Gulf, and hinted that more measures were to come. The shipping industry questioned the escort pledge.

:

In yesterday’s lead spot market, SHFE lead fluctuated and pulled back. Suppliers were mostly active in shipments, with quotations mainly at discounts, especially as cargoes self-picked up from production site at primary lead smelters were ample. Mainstream producing areas were quoted at premiums of a discount of 25 yuan/mt to a premium of 25 yuan/mt against the SMM #1 lead average price, ex-works. Meanwhile, secondary lead smelters became less willing to ship, and a few lead smelters halted production for maintenance; secondary refined lead was quoted at premiums of -50~0 yuan/mt against the SMM #1 lead average price, ex-works. Downstream enterprises maintained just-in-time procurement, but wait-and-see sentiment was strong; some focused mainly on digesting inventories, and spot market trading activity declined.

Inventory: As of March 4, LME lead inventory was flat for three consecutive days at 286,100 mt; SHFE lead ingot warrant inventory was unchanged at 54,888 mt. This week, SMM five-region social inventory of lead ingots edged down after reversing its prior trend, but remained at a five-month high.

Lead Price Forecast:

Recently, lead-acid battery enterprises in the domestic market basically resumed production. The overall operating rate in March rebounded sharply from February. Meanwhile, overseas geopolitical risks persisted, Middle East maritime transport was constrained, and lead-acid battery exports were also hindered. Current domestic and overseas lead ingot inventory is at a relatively high level, weighing on a rise in lead prices. On the supply side, secondary lead smelters in major producing areas added new maintenance, while the lead ingot import window opened, meaning both increases and decreases in lead supply coexist. In the short term, bullish and bearish factors coexist in the market, and lead ingots are expected to continue to consolidate.

Data Source Statement: Except for public information, all other data is processed by SMM based on public information, market communication, and SMM’s internal database models, and is for reference only and does not constitute decision-making advice.