Summary of SMM Lead Morning Meeting on July 20, 2023

Overnight, LME Lead was trading at $2098 per ton, with light trading in Asia, mostly fluctuating around $2100 per ton. In the European period, the expected increase in US dollar interest rates pushed the US dollar higher, while base metals fell under pressure. Lead prices fluctuated and fell, reaching as low as $2078.5 per ton until the decline was partially corrected in the late trading session, and finally closed at $2093.5 per ton, a decrease of 0.07%.
Overnight, the main contract of SHFE Lead 2308 was opened at 15795 yuan/ton. Against the backdrop of tight lead ingot supply, SHFE Lead immediately surged to 15850 yuan/ton after opening, setting a new 6-month high. The subsequent long short game intensified, coupled with the drag of the decline of Lun Lead, and Shanghai Lead took back most of its gains, fluctuating between 15750-15760 yuan/ton for a long time, and finally closed at 15755 yuan/ton, an increase of 0.19%; Its position reached 757.35 million hands, a decrease of 2828 hands compared to the previous trading day.
On the macro level, the Central Committee of the Communist Party of China and the State Council will increase policy support for the private economy, focus on promoting high-quality development of the private economy, and encourage private enterprises to expand overseas business. According to CME's "Federal Reserve Observation", the probability of the Federal Reserve maintaining interest rates unchanged from 5.00% to 5.25% in July is 0.8%, and the probability of raising interest rates by 25 basis points to the range of 5.25% to 5.50% is 99.2% (Gold Ten Data APP).
In terms of fundamentals, there are traditional peak season expectations for domestic lead consumption in the third quarter, which have become the main factor supporting lead prices. In addition, due to the entry of the summer high temperature period, lead smelting enterprises in Henan, Anhui and other regions have insufficient capacity release, coupled with routine maintenance of some refineries, leading to regional tight supply of lead ingots, especially in some regions where there is an inverted phenomenon between recycled lead and primary lead, which may help to continue strong fluctuations in lead prices.

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