Lead Price May Stop Falling and Stabilise as Lead Ingot Inventory Declined

SHANGHAI, Sep 20 (SMM) - Futures: LME lead opened at $1,894.5/mt overnight. The Fed’s interest rate meeting is imminent. The US dollar remained high, hence most of the metals prices fell. LME lead fluctuated between $1,885-$1,900/mt and finally closed at $1,882/mt, down 0.16%, after hitting the lowest point at $1,880/mt.

The most traded SHFE 2210 lead contract opened at 14,835 yuan/mt overnight amid the decline of lead ingots inventory. As the short decreased positions, SHFE lead rose to 14,900 yuan/mt. However, as the battery scrap prices fell, SHFE lead finally closed at 14,900 yuan/mt, up 0.2%, with the open interest down 1,501 lots to 46,773 lots.

Spot fundamentals: In the lead spot market yesterday, lead prices continued to fall and primary lead smelters held the prices firm. The retail quotations were in discounts of 0-50 yuan/mt over the SMM 1# lead average price. In mainstream trade markets such as Jiangsu, Zhejiang and Shanghai, the mainstream quotation of domestic lead maintained a discount of 10-30 yuan/mt over the SHFE lead 2210 contract. In terms of secondary lead, the smelters were unwilling to sell and the secondary refined lead was shipped in discounts of 100-0 yuan/mt over SMM 1# lead average price. Lead futures prices continued to fall, and the goods flew into the market after the delivery of SHFE 2209 contract. Cargo holders mainly quoted in slight premiums. As lead prices fell to the cost line of secondary lead, some secondary lead smelters held the prices firm and some secondary refined lead was quoted flat from the average price of SMM 1# lead. In this scenario, downstream enterprises tended to purchase primary lead, and the retail transactions improved. As of September 19, the social inventory of lead ingots across Shanghai, Guangdong, Zhejiang, Jiangsu and Tianjin was 83,500 mt, down 400 mt from last Friday (September 9) and up 12,500 mt from last Monday (September 13).

Lead price forecast: The Fed’s interest rate meeting is imminent, the expectations for interest rate hike are high. The US dollar index continued to increase, and the prices of natural gas in Europe fell. Therefore, most metals prices declined. The lead consumption is expected to be acceptable amid the traditional peak season of lead-acid battery market. As the lead prices decline, downstream enterprises are willing to purchase. Due to the production reduction of secondary lead smelters in Anhui and Jiangx, and the decline of lead ingot inventory, lead prices may stop falling and stabilise in the short term. In the follow-up, SMM will continue to pay attention to the impact of the interest rate meeting and battery scrap rices on lead prices.