Interwoven Bullish and Bearish Factors Make Short-term Lead Prices Stagnant [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,056/mt. During the Asian session, LME lead traded quietly, fluctuating between $2,050-2,060/mt. Entering the European session, multiple positive US economic data supported market bets on a November US Fed interest rate cut, causing the US dollar to weaken. LME lead fluctuated upward, reaching around $2,080/mt, and finally closed at $2,071.5/mt, up 0.8%.

Overnight, driven by the rise in LME lead, the most-traded SHFE lead 2412 contract opened at 16,895 yuan/mt. It initially jumped to 16,900 yuan/mt, but due to mediocre fundamentals, SHFE lead jumped initially and then pulled back, finally closing at 16,780 yuan/mt, down 0.03%. Its open interest increased by 1,678 lots to 39,381 lots compared to the previous trading day.

Macro side, the US October Markit Manufacturing PMI continued to contract, while the services sector remained stable. Inflation improved, but employment was weak. Multiple positive US economic data supported market bets on a 25 basis point interest rate cut by the US Fed in November. Initial jobless claims in the US unexpectedly fell last week, while continuing claims, affected by the hurricane, rose to the highest level in three years. The Eurozone October Manufacturing PMI remained sluggish, with German manufacturing better than expected, while France saw an accelerated contraction across the board.

Fundamentally, the supply-demand mismatch in the lead market is not prominent, and prices remain relatively stable. Currently, regions like Anhui are undergoing environmental protection inspections, leading some companies to reduce shipments. Meanwhile, the spread between futures and spot prices has widened, and holders are inclined to deliver next month, transferring lead ingot inventory to social warehouses. Additionally, the seasonal improvement in the lead-acid battery market is limited. As the month is about to end, downstream companies are not very active in buying and selling, resulting in a quiet market.