With Underperformance in the Spot Market, Domestic Lead Prices Fluctuated Downward [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,013.5/mt and fluctuated downward during the Asian session to a low of $1,977.5/mt. During the European session, influenced by rate cut news, the US dollar index weakened, and LME lead fluctuated upward to a high of $2,042.5/mt, finally closing at $2,032/mt, up 1.04%.

Overnight, the most-traded SHFE lead 2410 contract opened at 16,510 yuan/mt, initially reaching a high of 16,515 yuan/mt. After bulls reduced their positions, it fluctuated around 16,400 yuan/mt, closing at 16,385 yuan/mt, down 0.4%.

Macro-wise, the US Fed initiated a rate cut cycle with a 50 basis point reduction. The dot plot indicates another 50 basis point cut this year and a further 100 basis point cut next year. Bowman voted for a 25 basis point cut. Powell stated that rate cuts could be fast, slow, or paused depending on circumstances, with employment and inflation risks balanced. He saw no signs of rising recession risks and did not declare victory over inflation. Chinese Commerce Minister Wang Wentao stated that China would continue negotiations until the last moment in response to the EU's anti-subsidy investigation into Chinese electric vehicles.

On the spot fundamentals, primary lead smelters that resumed production after maintenance are operating steadily, while secondary lead performance is poor. Some smelters that resumed production halted again after a few days due to market conditions. End-user consumption in the lead-acid battery market remains weak, and large enterprises are not highly motivated to produce, continuing to schedule production based on sales. After lead prices weakened, downstream enterprises became cautious and hesitant to purchase, with a strong wait-and-see sentiment. Overall market transactions are sluggish, and short-term lead prices are likely to continue fluctuating downward.