The Impact of Chinese New Year Factors on the Market Will Intensify, and Lead Prices May Fluctuate Downward [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,934/mt, fluctuated upward during the Asian session, peaked at $1,949/mt in the European session before plunging, and rebounded slightly after hitting a low of $1,917/mt, finally closing at $1,936.5/mt, up 0.31%.

Overnight, the most-traded SHFE lead 2502 contract opened lower with a gap at 16,440 yuan/mt, briefly touched a high of 16,470 yuan/mt at the beginning of the session before fluctuating downward, hitting a low of 16,305 yuan/mt, and slightly rebounded at the end to close at 16,380 yuan/mt, down 1.15%.

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Macro:

Concerns over Trump's tariffs caused a disconnection between silver and copper prices in the US market and international markets. China's National Bureau of Statistics: In December, CPI rose 0.1% YoY, and for the full year of 2024, China's CPI increased by 0.2% YoY. China's Ministry of Commerce: The EU's practices in investigations against Chinese enterprises constitute trade and investment barriers.

Spot Fundamentals :

In the Shanghai market, Chihong lead was quoted at 16,590-16,645 yuan/mt, with a premium of 50-80 yuan/mt against the SHFE lead 2502 contract. In Jiangsu and Zhejiang regions, JCC and Jinde lead were quoted at 16,540-16,615 yuan/mt, with a premium of 0-50 yuan/mt against the SHFE lead 2502 contract. SHFE lead weakened, and suppliers quoted accordingly. Some primary lead cargoes self-picked up from production sites saw premiums continue to decline, while secondary refined lead maintained small premiums for sales, with ex-factory premiums of 0-100 yuan/mt against the SMM 1# lead average price. Downstream enterprises showed scattered purchasing behavior, with some buying on dips as needed and others remaining cautious.
Inventory: On January 9, LME lead inventory decreased by 2,900 mt to 227,600 mt, down 1.26%. As of January 9, the total social inventory of SMM lead ingots in five regions stood at 46,000 mt, down 6,900 mt compared to January 2, and down 2,300 mt compared to January 2.

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Lead Price Forecast:

Next week marks the delivery date for the SHFE lead 2501 contract, which may lead to the transfer of delivery cargoes to warehouses. Meanwhile, the impact of the Chinese New Year on the market will intensify. On one hand, downstream enterprises that started their holidays earlier will begin next week; on the other hand, long-distance logistics transportation vehicles will gradually decrease, disrupting spot market transactions. Additionally, suppliers generally plan to clear inventory before the holiday, resulting in limited expectations for inventory buildup of delivered lead ingots during this round. Overall, lead prices are likely to fluctuate downward.