Chinese New Year Atmosphere Emerging in the Lead Market, Supply and Demand Expected to Decline Further [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,966/mt. During the Asian session, LME lead fluctuated downward, with its center gradually moving lower. Entering the European session, LME lead inventory unexpectedly surged by nearly 20,000 mt, causing LME lead to plummet sharply to a low of $1,928/mt. During the night, LME lead attempted to recover to $1,950/mt but failed, ultimately closing at $1,934/mt, down 1.78%.

Overnight, the most-traded SHFE lead 2502 contract opened at 16,500 yuan/mt. As the Chinese New Year holiday approached, market trading gradually weakened, and SHFE lead maintained a consolidating trend. Dragged down by LME lead's decline at the beginning of the session, SHFE lead briefly fell below 16,500 yuan/mt before gradually recovering its losses and moving above 16,600 yuan/mt. However, due to insufficient bullish momentum, it eventually closed at 16,550 yuan/mt, down 0.21%. Its open interest reached 29,448 lots, a decrease of 975 lots compared to the previous trading day.

》Click to View SMM Lead Spot Historical Prices

Macro Perspective: China's Ministry of Commerce announced steady progress in expanding the opening-up of the service sector, with pilot programs extended in areas such as telecommunications, healthcare, and education. Additionally, this year's trade-in subsidies will be expanded. In the US, December CPI rose 2.9% YoY, meeting expectations, while core CPI unexpectedly cooled, with both YoY and MoM growth rates falling below expectations.

Spot Market Fundamentals:

Yesterday in the lead spot market, SHFE lead showed a trend of moving downwards after a higher opening. Suppliers sold in line with market trends, and as January 15 marked the delivery date for the SHFE lead 2501 contract, warehouse warrant cargo quotations were scarce. Sales were mainly from smelters offering cargoes self-picked up from production sites. Some suppliers continued to lower premiums to facilitate sales, with spot orders quoted at premiums of 0-200 yuan/mt ex-factory against the SMM 1# lead average price. Meanwhile, secondary lead smelters were also actively selling, with some reducing premiums. Secondary refined lead was quoted at premiums of 0-50 yuan/mt ex-factory against the SMM 1# lead average price, and transactions at premiums of around 100 yuan/mt were difficult. Downstream enterprises gradually completed pre-holiday restocking, and spot trading activity weakened.

Inventory: As of January 15, LME lead inventory surged by 18,425 mt to 23,900 mt. As of January 13, the total social inventory of lead ingots in five major 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:

Yesterday, the SHFE lead 2501 contract completed delivery, and subsequent market trading will primarily focus on enterprise dynamics in the Chinese market ahead of the Chinese New Year. With the Spring Festival travel rush underway, logistics vehicles in some regions have decreased, prompting suppliers to actively sell before the holiday. Premiums for primary and secondary lead are gradually declining. Meanwhile, some downstream battery enterprises plan to halt operations and take holidays this week, leading to a rapid contraction in lead consumption as downstream enterprises suspend activities. During this period, some secondary lead enterprises are expected to follow downstream enterprises in reducing or halting production. The lead market is anticipated to see simultaneous declines in supply and demand.