[SMM analysis] the lead is rising in Shanghai, and I can't hold it any longer! The end of Wulianyin pulled a new high.

SMM7 March 9: the recent financial markets are happy, the Chinese stock market is leaping by leaps and bounds, and the Shanghai Composite Index has approached 3500! Wait and see the surrounding commodity markets, most have changed the decline at the beginning of the year V-shaped bounce to above the level at the beginning of the year. Throughout the domestic economy, the manufacturing industry has recovered steadily and market demand continues to improve. According to data released by the Bureau of Statistics today, PPI rose 0.4% month-on-month in June, with a year-on-year decline narrowing and macro sentiment improving. At the moment, lead looks back at itself and is still struggling on the way down recently. as soon as its anger rose yesterday, it pulled up again today, breaking the recent pressure level, reaching a new high since January 22, 2020.

Today, Shanghai lead continued yesterday's rising trend, the main 2008 contract once pulled up to 15145 yuan / ton, as of 15:30 today closed at 15075 yuan / ton, an increase of 2.17%.

From a macro point of view, A-shares have performed well recently, with international commodity prices picking up in June, domestic manufacturing recovering steadily and market demand continuing to improve. According to data from the Bureau of Statistics, PPI rose 0.4% month-on-month in June, the decline narrowed, macro sentiment improved, and the overall trend of non-ferrous metals was strong, leading to a rise in lead prices.

In terms of fundamentals, in terms of primary lead, Henan Yuguang gold and lead production line is in the state of replacement production line in July, and the output is further tightened; while some smelters, such as Yunnan Chihong and Hunan Shuikoushan, are overhauled, and the primary lead production is expected to decline in July. In terms of recycled lead, the profits of recycled lead enterprises have been repaired, the production enthusiasm of smelters is high, and the demand for waste batteries is rising, which makes the supply of waste batteries still tight and it is difficult to increase production. Overall, the supply side is tightening. At the consumer end, the inventory pressure of lead-acid battery products is transferred to dealers. At present, dealers still mainly digest inventory, lack of support for lead consumption, and the lower reaches mostly favor the deep water supply of recycled lead, so the demand for primary lead is limited.

In addition, it is worth noting that the position in the 07 contract in that month was maintained at nearly 8000 hands, while the warehouse receipt inventory was only less than 20, 000 tons, which was a serious mismatch, and the price difference between the 07 contract and the main 08 contract further widened to around 390 yuan / ton.

To sum up, SMM believes that the supply side of primary lead is slightly tight, and downstream consumption is basically in the state of digesting inventory, but it is affected by capital disturbance, and warehouse receipt inventory is seriously insufficient, and the overall trend of Shanghai lead is strong in the short term.

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