Supply Issues Push Lead Prices Up, Attention Needed on Secondary Lead Profit Recovery [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,027/mt. With the strengthening of the US dollar index, base metals were under pressure, and LME lead hovered in the range of $2,020-2,030/mt for most of the day. It rose above $2,030/mt at night, driven by the strong performance of SHFE lead, but failed to hold steady and finally closed at $2,024/mt, up 0.02%.

Overnight, the most-traded SHFE lead 2412 contract opened at 16,970 yuan/mt. Bulls entered the market intensively at the beginning of the session, pushing SHFE lead to a strong rise, reaching a high of 17,190 yuan/mt, a new high in nearly a month. In the latter part of the trading session, SHFE lead hovered at highs and finally closed at 17,145 yuan/mt, up 1.12%. Its open interest reached 45,598 lots, an increase of 385 lots from the previous trading day.

Macro side, US Trump continued to finalise cabinet picks. A Florida congressman might become the US National Security Advisor. Paulson withdrew from the race for the next US Treasury Secretary, and Trump's key advisers supported Bessent. After Trump's election, the US Fed's voting members spoke for the first time: they will observe the post-election situation before judging the impact and are ready to respond to risks. The US Fed reported that the US one-year inflation expectations in October fell to a four-year low, and the labour market is expected to improve.

Fundamentally, the supply issues of lead ingots are prominent. On one hand, the SHFE lead 2411 contract is nearing delivery, and spot market circulation is limited. On the other hand, due to smog warnings in Henan, vehicle restrictions have slowed lead ingot shipments, while some medium and large secondary lead enterprises in Anhui are still in a state of reduced or halted production. Both primary and secondary lead are generally sold at a premium to the SMM 1# lead average price. Additionally, we need to continue to monitor the profit recovery of secondary lead and the resumption of production by smelters after the lead price rebounds.