Limited Improvement in Lead Consumption; Lead Ingot Inventory Yet to Deplete Quickly [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,086/mt, briefly touching a high of $2,095.5/mt during the Asian session. As the US dollar index strengthened, base metals broadly declined in the European session, with bears increasing positions, causing LME lead to plunge to a low of $2,046/mt. It rebounded slightly at the close, ending at $2,072.5/mt, down 1.31%.

Overnight, the most-traded SHFE lead 2411 contract opened at 16,520 yuan/mt, briefly touching a high of 16,575 yuan/mt at the start of trading. It fluctuated around 16,520 yuan/mt at the close, ending at 16,510 yuan/mt, down 1.61%.

Macro side, US Fed Governor Waller stated that the Fed should be more cautious about interest rate cuts than at the September meeting. If inflation falls below 2%, which is unlikely, or if the labour market deteriorates, the Fed could cut interest rates earlier. If inflation unexpectedly rises, the Fed may pause rate cuts. The PBOC released data showing that the increase in social financing from January to September was 25.66 trillion yuan, 3.68 trillion yuan less than the same period last year. At the end of September, the broad money (M2) balance was 309.48 trillion yuan, up 6.8% YoY. In the first three quarters, RMB loans increased by 16 trillion yuan, with household loans up 1.94 trillion yuan.

Fundamentals, today is the delivery day for the SHFE lead 2410 contract, with holders gradually moving inventory to warehouses. Lead ingot inventory in social warehouses continued to rise. In October, many primary lead smelters were in a state of resumption, leading to a significant increase in lead ingot supply, while lead consumption improved only slightly, not enough to quickly deplete inventory. In the short term, there is still pressure for lead ingot social inventory to accumulate. Additionally, in mid-October, environmental protection inspections in Anhui may affect secondary lead smelters, potentially leading to temporary production cuts or halts. Overall, lead prices may continue to fluctuate rangebound in the short term.