Supply-Demand Imbalance Exists, Lead Price Upside Room Still Needs Attention to Consumption [SMM Lead Morning Comment Dec 3]

Overnight, LME lead opened at $2,076.5/mt. SHFE lead showed strong performance, driving LME lead to fluctuate upward. During the Asian session, LME lead fluctuated between $2,070-2,080/mt. Entering the European session, the US dollar reversed the trend and rose, causing LME lead to give back some gains, trading below $2,060/mt. The tug-of-war between longs and shorts intensified during the night session, with LME lead rebounding but then falling again in the late session, finally closing at $2,073/mt, down 0.41%.

Overnight, the most-traded SHFE lead 2501 contract opened at 17,635 yuan/mt. Bulls entered the market at the beginning of the session, pushing SHFE lead to a strong upward surge, reaching a three-month high of 17,760 yuan/mt. In the latter part of the trading session, SHFE lead hovered around 17,725 yuan/mt for a long period until the late session, finally closing at 17,695 yuan/mt, up 1.52%. Its open interest reached 63,555 lots, an increase of 3,483 lots from the previous trading day.

Macro side, PBOC announced that a new M1 statistical caliber will be implemented in January next year, including personal current deposits and customer reserves of non-bank payment institutions. Pan Gongsheng stated that the PBOC will continue to adhere to a supportive monetary policy stance and orientation next year. China's Caixin Manufacturing PMI for November rose to 51.5, a five-month high, accelerating expansion. Additionally, US Fed Waller indicated a preference for continuing interest rate cuts in December, but inflation could affect actions, and if inflation unexpectedly rises, a pause in rate cuts might be considered.

Fundamentally, lead prices have shown a fluctuating upward trend recently. Downstream enterprises' wait-and-see sentiment has eased, and they have gradually started inquiring and purchasing, leading to a decline in lead ingot social inventory. Meanwhile, primary and secondary lead smelting enterprises are undergoing both maintenance and recovery. Among them, secondary lead profits have improved, increasing the production enthusiasm of smelting enterprises, but the current spot cargo circulation remains limited. During this period, mainstream primary lead smelters in major production areas quoted cargoes self-picked up from production site at premiums of 50-100 yuan/mt against the SMM 1# lead average price, ex-factory. Secondary refined lead prices varied significantly by region, with spot order quotations ranging from discounts of 100 yuan/mt to premiums of 100 yuan/mt against the SMM 1# lead average price. Future lead prices still need to pay attention to the return of consumption.