Approaching delivery, inventory buildup of lead ingots weighs on lead prices; secondary lead costs may provide some support to lead prices [SMM Lead Morning Comment]

Last Friday, LME lead opened at $2,071/mt, briefly touched a low of $2,070/mt during the Asian session, and then rebounded. Due to a weaker US dollar index, base metals rose across the board during the European session, with LME lead fluctuating upward to a high of $2,100/mt, closing at $2,100/mt, up 1.25%.

Last Friday night, the most-traded SHFE lead 2411 contract opened at 16,805 yuan/mt, briefly touched a low of 16,760 yuan/mt at the beginning of the session, and was boosted by LME lead to a high of 16,980 yuan/mt, closing at 16,950 yuan/mt, up 1.83%.

Macro side, the US September PPI year-on-year rate recorded 1.8%, higher than the market expectation of 1.6%. China's Ministry of Finance announced four incremental policies, stating that other tools are under study. Additionally, on the 12th, Liu Shangxi, President of the Chinese Academy of Fiscal Sciences, discussed the reform of central-region fiscal relations: increasing the central fiscal expenditure ratio to at least 30%-40%.

Fundamentals, due to delivery factors, lead ingot inventory shifted from in-plant inventory to social warehouses, turning into visible inventory, putting pressure on lead prices. Meanwhile, limited supply of battery scrap means its price cannot follow the decline in lead prices, causing significant losses for smelters. The price inversion between secondary lead and primary lead provides some support to lead prices.