Pre-Holiday Downtime in Downstream and Cost Factors Intertwined, Short-Term Lead Prices May Maintain a Consolidation Trend [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,952.5/mt. During the Asian session, trading was sluggish with LME lead fluctuating between $1,945-1,950/mt. Later, the US dollar index reversed and pulled back, while LME lead inventory declined. During the night session, LME lead stopped falling and rebounded, eventually closing at $1,969/mt, up 1.08%.

Overnight, the most-traded SHFE lead 2502 contract opened at 16,530 yuan/mt. Pressure from inventory buildup due to lead ingot delivery persisted, while battery scrap prices rose against the trend, pushing up secondary lead costs. SHFE lead surged strongly after the opening, reaching a high of 16,680 yuan/mt. By the close, longs took profits, and SHFE lead gave back part of its gains, finally settling at 16,625 yuan/mt, up 0.82%. Its open interest decreased by 2,757 lots to 32,242 lots compared to the previous trading day.

》Click to View SMM Lead Spot Historical Prices

Macro: PBOC stated that it will further strengthen counter-cyclical adjustments and adjust and optimize policy intensity and pace when appropriate. In December, China's new social financing reached 2.86 trillion yuan, with new RMB loans at 990 billion yuan, and the M2-M1 gap narrowed. In the US, December PPI unexpectedly cooled, with MoM growth slowing to 0.2%, driven by a drop in food prices. The two-year US Treasury yield hit a new intraday low.

Spot Fundamentals :

Yesterday in the lead spot market, SHFE lead fluctuated downward. As the delivery date approached, limited circulating supply in Jiangsu, Zhejiang, and Shanghai led suppliers to stand firm on quotes. Meanwhile, ex-factory premiums for cargoes from smelters were lowered, especially in South China, where high premiums eased. Downstream enterprises purchased on dips as needed, and spot order transactions were moderate in certain regions. For primary lead, smelter inventories were relatively low, with spot order quotations at premiums of 0-150 yuan/mt against the SMM 1# lead average price ex-factory. In mainstream trade markets like Jiangsu, Zhejiang, and Shanghai, domestic lead mainstream quotations were at premiums of 20-80 yuan/mt against the SHFE lead 2502 contract. For secondary lead, smelters gradually resumed production, increasing circulating supply in the spot market. Secondary refined lead quotations were at premiums of 0-100 yuan/mt against the SMM 1# lead average price ex-factory.

Inventory: As of January 14, LME lead inventory decreased by 2,600 mt to 220,575 mt. As of January 13, the total social inventory of lead ingots in five regions monitored by SMM stood at 47,600 mt, down 600 mt from January 6 but up 1,700 mt from January 9.

》Click to View SMM Metal Industry Chain Database

Lead Price Forecast for Today:

Today marks the delivery date for the SHFE lead 2501 contract, with expectations of visible inventory increases due to warehouse transfers. Recently, some large secondary lead smelters have resumed production, leading to relatively ample circulating supply in the lead market. Spot premiums for both primary and secondary lead have gradually declined. On the consumption side, as the Chinese New Year approaches, downstream enterprises are conducting their final pre-holiday restocking, suggesting limited short-term inventory buildup for lead ingots. Additionally, increased production by secondary lead enterprises has driven up demand for battery scrap, causing its price to rise against the trend. This has pushed up secondary lead costs, which may support lead prices to maintain a consolidating trend.