Lead Ingot Inventory Accumulation Intensified, Future Lead Prices to Watch for National Day Stockpiling Expectations [SMM Lead Morning Comment]

Last Friday, LME lead opened at $2,081/mt. During the Asian session, LME lead fluctuated upward, reaching an intraday high of $2,097.5/mt, a new high in nearly one and a half months. However, entering the European session, the US dollar index rose, coupled with an increase in LME lead inventory, causing LME lead to reverse and fall. The decline expanded during the night session, with LME lead giving up all daytime gains and finally closing at $2,042/mt, down 1.94%.

Last Friday, the most-traded SHFE lead 2410 contract opened at 16,520 yuan/mt. After the Mid-Autumn Festival, lead ingot inventory increased daily. SHFE lead quickly fell after opening, hitting a low of 16,320 yuan/mt and finally closing at 16,340 yuan/mt, down 1.8%. Its open interest was 33,860 lots, a decrease of 2,445 lots from the previous trading day.

Macro-wise, China did not cut interest rates, with the 1-year and 5-year LPRs remaining unchanged in September. US Fed Governor Waller noted that inflation slowed faster than expected, leading him to join the 50 basis point rate cut camp. Governor Bowman explained her dissenting vote, citing concerns about inflation and that a 50 basis point cut might be seen as prematurely declaring victory over inflation. Goldman Sachs indicated that two key voting members suggested the US Fed might slow the pace of rate cuts, making November uncertain. Additionally, weekend clashes between Israel and Lebanese militants intensified.

Fundamentally, after the Mid-Autumn Festival holiday, lead ingot inventory accumulation intensified both domestically and internationally. Domestic downstream enterprises gradually resumed normal production. Moving forward, we need to focus on the customary stockpiling actions of downstream enterprises before the National Day holiday. If consumption meets expectations, lead prices could potentially reach 17,000 yuan/mt. Conversely, we need to monitor the supply of scrap and the cost support from secondary lead.