Overnight Lead Futures Continued to Fluctuate Downward, Spot Market Transactions Declined Near Year-End [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,966.5/mt. With shorts increasing positions, LME lead was under pressure and fluctuated downward along the intraday moving average, hitting a low of $1,945/mt before closing at $1,946/mt, down $20/mt or 1.02%.
Overnight, the most-traded SHFE lead 2502 contract opened at 16,790 yuan/mt. After briefly touching a high of 16,810 yuan/mt at the beginning of the session, it weakened again, hitting a low of 16,740 yuan/mt. It later rebounded and closed at 16,775 yuan/mt, down 55 yuan/mt or 0.33%.

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Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted with a premium of 150-180 yuan/mt against the SHFE lead 2502 contract. In Jiangsu and Zhejiang regions, Tongguan and JCC lead were quoted with a premium of 50-100 yuan/mt against the SHFE lead 2502 contract. The center of SHFE lead prices continued to move downward. Suppliers stood firm on quotes while delivering, with premiums generally raised compared to last Friday. Smelters had limited supply, either holding back or standing firm on quotes. A few smelters, aiming to clear year-end inventories, lowered premiums (against the SMM 1# lead average price). Meanwhile, downstream enterprises remained cautious and adopted a wait-and-see approach, leading to sluggish transactions in the spot market.
Inventory: According to the SMM survey, as of December 30, the total social inventory of lead ingots in five major regions stood at 53,100 mt, down 3,100 mt from December 23 and down over 700 mt from December 26.

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Lead Price Forecast Today:

Macro side, the US dollar index remained range-bound as traders continued to price in the possibility of fewer interest rate cuts by the US Fed in 2025. Fundamentals side, the impact of environmental protection-driven production restrictions eased, and secondary lead smelting enterprises gradually plan to resume production. However, environmental restrictions in Hunan persist, with only a few primary lead smelters expected to resume after New Year’s Day. Lead ingot supply remains limited, and smelters in the region maintained a premium of 300 yuan/mt while being reluctant to sell. After last Friday's sharp decline in lead prices, this week saw continued downward fluctuations. Some downstream enterprises showed interest in buying the dip as needed, but refined lead supply remained tight in certain areas. Smelter inventories and social inventories of lead ingots continued to decline. After the New Year holiday, attention should be paid to the resumption of regular operations by downstream enterprises following the resolution of year-end account settlements and inventory checks, as well as pre-holiday stocking by dealers. The lead market may see a simultaneous increase in supply and demand.