Limitations on ingot supply will support lead prices to continue fluctuating upward [SMM Lead Morning Comment]

Last Friday, LME lead opened at a low of $2,004.5/mt, fluctuated upward during the Asian session, and continued to rise as bulls increased positions in the European session, reaching a high of $2,034/mt. It then pulled back at the end of the session, closing at $2,018/mt, up 0.75%.

Last Friday night, the most-traded SHFE lead 2501 contract opened at 16,955 yuan/mt, briefly touched a low of 16,935 yuan/mt at the beginning of the session, and then rose to 17,050 yuan/mt as bulls increased positions, finally closing at 17,040 yuan/mt, up 0.74%.

Macro side, last Friday, the market generally believed that Trump's rise to power would boost the US dollar, and the weakening of the US Fed's interest rate cut expectations for next year further supported the US dollar's performance. The US dollar index once surged above the 108 mark, approaching a 13-month high. The preliminary value of the US November S&P Global Manufacturing PMI recorded 48.8, a 4-month high. The preliminary value of the US November S&P Global Services PMI recorded 57, a 32-month high. The preliminary value of the US November S&P Global Composite PMI recorded 55.3, a 31-month high.

Fundamentals, due to air pollution, secondary lead smelters repeatedly reduced or halted production, and primary lead smelters added new maintenance. The limitations on ingot supply will support lead prices to fluctuate upward. Meanwhile, downstream production adjustments amid enterprises' routine inventory checks at month-end may slow down their purchasing activities. Under the stalemate of supply and demand, lead prices are expected to remain in a consolidation trend.