Downstream Rigid Demand Slowly Recovers, Lead Prices Continue to Fluctuate Downward [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,989/mt, consolidated around the daily moving average during the Asian session, and rose further to a high of $1,998/mt as shorts exited during the European session. It eventually closed at $1,996.5/mt, up $14/mt or 0.71%. Overnight, the most-traded SHFE lead 2503 contract opened at 17,150 yuan/mt, briefly touched a high of 17,160 yuan/mt before declining to a low of 17,085 yuan/mt, and then fluctuated rangebound. It finally closed at 17,135 yuan/mt, down 35 yuan/mt or 0.20%.

》Click to view SMM lead spot historical prices

Macro: Overnight, the US dollar rose 0.3% to 107.05. Market focus has shifted to the US Fed's January meeting minutes, which will be released on Wednesday, as investors seek clues on the interest rate trajectory. On February 16, Pan Gongsheng, Governor of the People's Bank of China, attended the Emerging Markets Economies Seminar co-hosted by the International Monetary Fund and Saudi Arabia and delivered a keynote speech. He stated that the Chinese government will implement more proactive fiscal policies and moderately loose monetary policies, strengthen counter-cyclical macroeconomic adjustments, continue to promote the transformation of China's economic growth model, and consolidate and enhance the momentum of economic recovery.

Spot Fundamentals:

Spot Fundamentals:
In the Shanghai market, Honglu lead was quoted on par with the SHFE lead 2503 contract; in Jiangsu and Zhejiang regions, JCC and Jijin lead were quoted at discounts of 20-0 yuan/mt against the SHFE lead 2503 contract. SHFE lead remained rangebound, with suppliers keeping premiums and discounts largely unchanged. Smelters offered ex-factory cargoes at discounts of 50 yuan/mt to premiums of 150 yuan/mt against the SMM 1# lead average price. In the secondary lead market, due to the firm prices of scrap batteries, smelters stood firm on quotes, with secondary refined lead quoted at discounts of 100-0 yuan/mt against the SMM 1# lead average price ex-factory. However, downstream enterprises had limited just-in-time procurement needs and showed weak purchase willingness for high-priced lead, with spot market transactions relatively sluggish. For secondary refined lead, ex-factory quotes ranged from discounts of 150 yuan/mt to premiums of 0 yuan/mt against the SMM 1# lead average price. Due to the firm scrap battery prices, most suppliers narrowed discounts to 50-0 yuan/mt, with a few quoting premiums of 25 yuan/mt. Tax-exclusive refined lead mainstream ex-factory quotes were at 15,900-16,000 yuan/mt. Downstream battery producers purchased as needed, with muted transactions.
Inventory:
As of February 18, LME lead inventory fell by 1,650 mt to 220,775 mt. According to SMM, as of February 17, the total social inventory of lead ingots in five major regions tracked by SMM reached 53,400 mt, up 7,200 mt from February 10 and 1,100 mt from February 13.

》Click to view the SMM metal industry chain database

Lead Price Forecast Today:

In the spot market, downstream just-in-time procurement recovered slowly, while refined lead supply increased. Early-week inventory accumulation temporarily weighed on lead prices. This week, some smelters in Hunan resumed production and prioritized shipments under long-term contracts, with no spot quotes available. Traders offered ex-factory cargoes at discounts of 50-0 yuan/mt against the SMM 1# lead average price. In terms of raw material supply, scrap battery recyclers gradually resumed operations. Although scrap battery supply eased slightly, quotes remained firm and were more likely to rise than fall. Import losses widened, coupled with tight overseas silver-lead ore supply, keeping February lead concentrate TC stable at low levels. In the short term, lead prices are expected to fluctuate downward with strong support below. Additionally, Anhui province launched a "You Order, We Help" quality and technical assistance campaign. Further attention is needed on whether secondary refined lead enterprises will adjust production or face cost changes.