High Raw Material Prices Strongly Support Lead Prices; Focus on the Impact of Secondary Lead Smelter Profit Changes on Supply [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $2,089.5/mt, fluctuated upward during the Asian session, peaked at $2,104.5/mt in the European session, then plunged to a low of $2,080/mt before closing at $2,089/mt, down 0.12%.

Overnight, the most-traded SHFE lead 2505 contract opened at 17,750 yuan/mt, briefly touched a high of 17,760 yuan/mt in early trading, but was dragged down by the decline in LME lead, plunging to a low of 17,640 yuan/mt before closing at 17,655 yuan/mt, down 0.06%.

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Macro:

On Wednesday, the US dollar index jumped initially and then pulled back, plunging sharply after the US Fed's interest rate decision was announced, erasing most of its intraday gains. Meanwhile, three Chinese departments issued the "Implementation Rules for Subsidies on New Energy Urban Buses and Power Battery Renewal in 2025."

Spot Fundamentals :

In the Shanghai market, Chihong lead was quoted at 17,625-17,690 yuan/mt, with premiums of 10-30 yuan/mt against the SHFE 2504 contract. In Jiangsu and Zhejiang regions, Tongguan, JCC, and Jinde lead were quoted at 17,615-17,660 yuan/mt, on par with the SHFE 2504 contract. SHFE lead hovered at highs, and market circulation of cargoes was limited. Suppliers stood firm on quotes, with ex-factory cargoes of primary lead still sold at premiums, showing little change from the previous day. Secondary refined lead was quoted at discounts of 75-0 yuan/mt against the SMM 1# lead average price on an ex-factory basis. Downstream inquiries were moderate, with cautious procurement of high-priced goods, and spot market transactions were relatively weak.

Inventory: On March 19, LME lead inventory increased by 9,250 mt to 229,225 mt. As of March 17, the total social inventory of lead ingots in five major regions monitored by SMM reached 71,700 mt, up by 5,500 mt from March 10 and by 4,000 mt from March 13.

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Lead Price Forecast Today:

The supply of scrap batteries remains tight, with prices continuing to rise, providing strong support for lead prices. Secondary lead smelters face high raw material costs, narrowing the discounts on refined lead ex-factory quotations. Downstream purchases remain on a need-only basis, with attention on the impact of rising raw material prices on the profits of secondary lead smelters. Additionally, a major smelter is expected to undergo maintenance in late March, which may lead to a temporary tightening of primary lead spot supply. Overall, lead prices are likely to fluctuate upward in the short term.