Inventory accumulation dragged down lead prices, awaiting "trade-in" transmission on the consumption side [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,064/mt. Lower-than-expected US economic data heightened market concerns about a recession and increased bets on a rate cut in September, leading to a general decline in base metals. LME lead also fell sharply, hitting a low of $2,015/mt during the session, a new two-week low. By the end of the session, LME lead closed at $2,015.5/mt, down 2.4%.

Overnight, the SHFE lead warehouse warrant inventory continued to accumulate, and the overall trading focus of SHFE lead shifted downward day by day. The most-traded SHFE lead 2410 contract opened at 17,065 yuan/mt. After intensified long-short competition, SHFE lead rebounded from a low but failed to stand at 17,200 yuan/mt, finally closing at 17,160 yuan/mt, down 0.12%. Its open interest was 53,650 lots, a decrease of 1,842 lots from the previous trading day.

Macro-wise, this year's voting member and Atlanta Fed President Bostic supported an immediate rate cut without waiting for inflation to drop to 2%. The US Fed's Beige Book confirmed slowing economic growth, falling prices, and cooling hiring. The US July JOLTS job openings unexpectedly fell to a three-and-a-half-year low, significantly increasing market bets on a 50 basis point rate cut by the Fed in September.

Fundamentally, the domestic lead ingot inventory accumulation trend remains unchanged. Before there is a significant improvement in lead consumption, holders transfer inventory to warehouses, turning invisible inventory into visible inventory. Inventory accumulation remains the main factor dragging down lead prices. Additionally, some secondary lead enterprises are expected to resume production, increasing demand for scrap, and the high prices of battery scrap may provide some cost support for lead prices. Continued attention should be paid to the impact of the "trade-in" policy on the consumption transmission in the lead-acid battery market for electric bicycles and automobiles.