Overnight Lead Prices Slightly Increased, Refined Lead Supply May Be Affected Again by Smog Warnings [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,012/mt, fluctuated upward during the Asian session, continued to strengthen during the European session, reaching a high of $2,043.5/mt before falling under pressure, and finally closed at $2,013/mt, up $8.5/mt, an increase of 0.42%.

Overnight, the most-traded SHFE lead contract switched to the 2501 contract, opened at 17,060 yuan/mt, slightly weakened after touching a high of 17,080 yuan/mt at the beginning of the session, then consolidated sideways around the intraday moving average, and finally closed at 16,995 yuan/mt, up 135 yuan/mt, an increase of 0.80%.

Macro side, concerns over the escalation of the Russia-Ukraine conflict eased, and the US dollar index temporarily halted its decline and rebounded slightly. Fu Linghui, spokesperson for the NBS, stated that market confidence was boosted in October, with active stock market trading. In October, the trading volume and value of stocks in the Shanghai and Shenzhen markets both increased approximately 1.5 times YoY. Attention can be focused on the Central Economic Work Conference in mid-December and subsequent policy space.

Fundamentals, domestic refined lead circulation remains insufficient, and refined lead supply may be affected again by smog warnings. Secondary refined lead producers maintained firm quotes and were reluctant to sell, with no large discount quotes available in the market. Winter stockpiling in north China is nearing completion, but the supply of crude lead and lead concentrate in Hunan, Yunnan, and other regions has tightened again, with processing fees for some crude lead containing multiple metals already declining. However, the transmission of rising raw material prices is not smooth, making it relatively difficult to trade spot cargoes at high premiums. Downstream sentiment remains cautious, and lead prices may continue to fluctuate rangebound in the short term.