Limited Ingot Output Drives Strong Lead Prices [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,021.5/mt, fluctuated downward throughout the day, and its trading focus shifted lower compared to the previous day. During the Asian session, driven by strong SHFE lead, LME lead maintained a consolidation trend. However, entering the European session, the US dollar index hit a nearly four-month high, causing a general decline in base metals. LME lead weakened, reaching a low of $2,015.5/mt, and finally closed at $2,023.5/mt, flat compared to the previous day.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,935 yuan/mt. SHFE lead surged initially, reaching a high of 16,990 yuan/mt. However, with the intensifying inventory buildup of lead ingots, SHFE lead jumped initially and then pulled back, fluctuating between 16,900-16,950 yuan/mt during the latter half of the trading session, and finally closed at 16,925 yuan/mt, up 0.39%. Its open interest reached 42,546 lots, down 874 lots from the previous trading day.

Macro side, China’s new social financing in October was 1.4 trillion yuan, with new RMB loans at 500 billion yuan. The growth rates of social financing and RMB loans slowed. M1 decline narrowed to 6.1%, and M2 growth expanded to 7.5%, reducing the negative growth gap between M1 and M2. Pan Gongsheng: Increase the counter-cyclical adjustment of monetary policy and improve policy tools to address abnormal stock market fluctuations. Additionally, media reports suggest that the next US Treasury Secretary candidate might be finalized this week, with Trump leaning towards a Wall Street veteran.

Fundamentals side, after the start of winter heating, frequent smog warnings were issued in regions like Henan and Anhui, further restricting vehicle transportation and extending factory delivery times. Moreover, as the front-month SHFE lead contract enters delivery this week, delivery brands are being transferred to warehouses, continuing the rise in social inventory of lead ingots. Additionally, we need to keep monitoring the resumption of secondary lead enterprises and the price spread between secondary lead and primary lead, which could lead to potential consumption shifts.