Recent Long-Short Interweaving, Lead Prices Under Pressure [SMM Lead Morning Meeting Summary]

Futures market:

Overnight, LME lead opened at $1,932/mt, rose to a high of $1,944/mt during the Asian session, then fluctuated downward during the European session, hitting a low of $1,915/mt, and finally closed at this level, down $12.5/mt, a decrease of 0.65%.

Overnight, the most-traded SHFE lead 2506 contract opened with a gap at 16,890 yuan/mt, then fell to a low of 16,825 yuan/mt, slightly rebounded, and consolidated around 16,850 yuan/mt, finally closing at 16,835 yuan/mt, down 125 yuan/mt, a decrease of 0.74%.

Macro side, there are significant concerns about U.S. bond repayments in Q2, with a substantial increase in the risk of U.S. bond sell-offs, leading to a significant rise in market risk aversion sentiment.

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Spot fundamentals:

In the Shanghai market, Chihong lead was quoted at a premium of 50-80 yuan/mt against the SHFE lead 2505 contract, Jijin lead 1 at a premium of 0-30 yuan/mt against the SHFE lead 2505 contract; in the Jiangsu-Zhejiang region, JCC lead was quoted at a premium of 0-30 yuan/mt against the SHFE lead 2505 contract. SHFE lead showed a high consolidation trend, with suppliers actively quoting and selling, warehouse cargo quotes saw a decrease in premiums, while in some regions, the discounts for primary lead smelter cargoes self-picked up from production site expanded again (against the SHFE lead 2505 contract). Downstream enterprises maintained purchasing as needed, with low enthusiasm for inquiries, and some rigid demand leaned towards low-priced secondary lead sources.

Inventory side: LME inventory decreased by 350 mt to 281,275 mt, with the main reduction coming from the Kaohsiung warehouse. According to SMM, as of April 21, the total social inventory of lead ingots in five regions monitored by SMM was 54,600 mt, down 12,000 mt from April 14; down 8,300 mt from April 14.

Today's lead price forecast:

Fundamentals side, primary lead supply is relatively stable, but in terms of secondary refined lead, the increase in scrap battery prices is higher compared to the increase in by-product profits, thus more secondary refined lead enterprises are cutting production due to cost and profit impacts, becoming a bottom support for lead prices. Consumption side, the impact of accumulated U.S. tariffs on battery orders is gradually emerging, coupled with the domestic traditional consumption off-season, battery enterprises have poor enthusiasm for stockpiling, and the market sentiment is cautious. Recently, lead prices have been mixed, and the most-traded SHFE lead contract may face pressure to consolidate around 17,000 yuan/mt in the short term.

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