Lead Futures Rose Overnight and Downstream Maintained Purchase as Needed

SHANGHAI, May 20 - Futures: The LME lead opened at $2,048.5/mt and then went up. During the Asian trading hour, it fluctuated around $2,060/mt and fell to $2,025/mt during European trading hours, then rose to the high of $2,080/mt amid the rising non-ferrous metals prices, and finally closed at $2,074/mt, or 1.24%. Open interest decreased by 341 lots to 98,153 lots. The most-traded SHFE 2206 lead contract opened at14,815 yuan/mt, and rose rapidly to 14,935 yuan/mt, and then fell slightly tonear 14,900 yuan/mt, and finally closed at14,935 yuan/mt, up 0.78%. The open interest decreased by 3480 lots from the previous trading day to 36,072 lots.

Spot fundamentals: Chihong lead in Shanghai was quoted in premiums of 0-20 yuan/mt over the SHFE 2206 lead contract. Henan JINLI GOLD and LEAD Group, Jiangxi Copper Group and Anhui Tongguan Copper Foil Group in Jiangsu and Zhejiang market quoted in premiums of 0-30 yuan/mt over the SHFE 2206 lead contract. As the futures lead stopped falling and rebounded, the cargo holders began to ship. However, due to the wait-and-see sentiment of primary and secondary lead smelters, the market supply was limited. According to SMM research, several smelters said that the prices of raw materials were still high due to the limited decline, hence it is difficult to replenish crude lead and lead concentrate this week. As a result, smelters were unwilling to sell lead ingots and maintained quotation in premiums of 0-100 yuan/mt with low enthusiasm for shipping. Downstream companies restocked as required and the retail trades were good. In terms of secondary refined lead, after the lead prices began to rebound, smelters’ willingness to ship slightly improved, but the quotation remained firm under cost pressure. The mainstream secondary refined lead (including tax) quoted flat over the SMM average price of 1# lead, and the downstream battery factory purchased as needed. As a result, the market transactions were still not good.

Lead price forecast: On the supply side, although the smelting raw materials supply of lead concentrate and battery scrap, such as lead ingot continued to be tight, the recycling market for battery scrap gradually recovered amid the eased domestic pandemic control, hence the secondary lead smelters were highly motivated to purchase raw materials for storage. Although the lead prices stopped falling for a short time, smelters still maintained quotations in premiums and were reluctant to sell with wait-and-see mood. In terms of consumption, traders purchased a small amount of lead ingots at lows. However, the downstream lead-acid battery orders were modest, hence the enterprises purchased as needed with low raw material procurement enthusiasm. On the whole, SHFE lead has tested cost support several times this week, and the spot prices were firm. The price difference between primary lead and secondary lead has narrowed. It is expected that SHFE lead may gain some support in the general rise of non-ferrous metals, and usher in a rebound to 15000 yuan/mt. SHFE 1# lead is expected to rose by 50-100 yuan/mt today.