Downstream Procurement Gradually Recovers After the Holiday, Secondary Refined Lead Quotations Inverted [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,950/mt and consolidated around the daily moving average during the Asian session. Entering the European session, it briefly touched a high of $1,966/mt before fluctuating downward to a low of $1,933/mt, closing down by $18/mt or 0.92%. Overnight, the most-traded SHFE lead contract opened at 16,795 yuan/mt, briefly touched a high of 16,855 yuan/mt at the beginning of the session before weakening to a low of 16,735 yuan/mt. Before the close, it rebounded to near the daily moving average, finally settling at 16,780 yuan/mt, down by 35 yuan/mt or 0.21%.

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Spot Fundamentals: In the Shanghai market, Chihong lead was quoted at premiums of 50-100 yuan/mt against the SHFE 2502 contract. In Jiangsu and Zhejiang regions, JCC and Jinde lead were also quoted at premiums of 50-100 yuan/mt against the SHFE 2502 contract. After the New Year holiday, SHFE lead saw a positive start, but due to limited circulating supply, suppliers offered fewer quotes. Meanwhile, smelters maintained firm quotes for cargoes self-picked up from production sites. Although secondary refined lead smelters increased shipments during this period, downstream enterprises showed moderate purchasing enthusiasm due to price factors, leading to muted transactions in the spot market. As of yesterday, secondary refined lead was quoted at premiums of 25-125 yuan/mt ex-factory against the SMM 1# lead average price, with some quotes reaching premiums of 325 yuan/mt, exceeding primary lead prices. Downstream enterprises showed a preference for primary lead due to rigid demand. According to the SMM survey, as of January 2, the total social inventory of lead ingots in five major regions stood at 52,800 mt, down by 1,000 mt compared to December 26 and by approximately 300 mt compared to December 30.

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Lead Price Forecast Today:

Macro side, weak global manufacturing activity has heightened demand concerns, while a stronger US dollar has also pressured the overall non-ferrous metals market. Fundamentals side, primary lead smelter supply recovery in December remained limited, with the impact of environmental protection-driven production restrictions in Hunan not fully dissipated. Additionally, smelter supply in Guangdong and Yunnan declined, leading to limited circulating supply of primary lead in the South China market, where spot orders maintained high premiums. Meanwhile, this week, the smog alert in Anhui was lifted, and local secondary lead smelting enterprises gradually resumed production. However, as lead prices declined, secondary lead profits shrank, prompting smelting enterprises to stand firm on quotes. Secondary refined lead prices inverted against primary lead. Downstream battery manufacturers gradually resumed procurement, with some continuing to consume social warehouse inventory. Moving forward, attention should be paid to the potential boost to lead prices from downstream raw material stocking ahead of the Chinese New Year.