Inventory Buildup Pressure Persists, Overnight Lead Futures Close Lower [SMM Lead Morning Brief]

SMM March 18:

Overnight, LME lead opened at $2,076.5/mt, briefly touched a low of $2,076/mt during the Asian session, and then fluctuated upward. During the European session, it peaked at $2,100/mt before pulling back at the close, finally settling at $2,084.5/mt, up 0.77%. Overnight, the most-traded SHFE lead 2504 contract opened at a high of 17,655 yuan/mt, dipped to a low of 17,570 yuan/mt in early trading, and slightly rebounded at the close, ending at 17,595 yuan/mt, down 0.28%.

Yesterday marked the delivery day for the SHFE lead 2503 contract, with delivery cargoes gradually arriving at warehouses over the weekend. Social inventory of lead ingots once again exceeded the 70,000 mt threshold, reaching a four-month high. Recently, lead prices have fluctuated upward, with the overall price center shifting higher. However, spot market transactions were weaker than futures, and the spread between futures and spot prices remained around 200 yuan/mt, prompting some suppliers to maintain their intention to transfer to delivery warehouses. Meanwhile, the in-plant inventory of major primary lead smelters has fallen below 10,000 mt (as of March 13, the weekly in-plant inventory of primary lead enterprises was 5,700 mt), limiting the subsequent transfer of lead ingots to warehouses. After delivery, the trend of inventory buildup in social inventory of lead ingots may slow. Additionally, the import window for lead ingots briefly opened earlier, and certain imported lead is expected to arrive soon, warranting attention to its impact on ingot production and inventory. Overall, lead prices are likely to face short-term pressure and fluctuate.