Lead Prices Stabilize Amid Weak Supply and Demand Before the Holiday; Social Inventory Continues to Decline [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,970/mt, fluctuated downward during the Asian session, rebounded to a high of $1,977.5/mt during the European session, then fluctuated downward again to a low of $1,947/mt, and finally closed at $1,949/mt, down $15/mt or 0.76%. Overnight, the most-traded SHFE lead 2503 contract opened at 16,775 yuan/mt, slightly rose after the opening to touch 16,815 yuan/mt, then consolidated sideways, and finally closed at 16,785 yuan/mt, up 50 yuan/mt or 0.3%.

》Click to view SMM lead spot historical prices

Macro side, the US dollar index fluctuated and stabilized, with the market awaiting directions on tariffs and central bank decisions. Domestically, the central bank plans to enhance the convenience of using policy tools and will appropriately expand and increase the scale of these tools.

Spot Fundamentals:

In the Shanghai market, quotations were scarce; in Jiangsu and Zhejiang regions, Tongguan and JCC lead were quoted at a premium of 0-50 yuan/mt against the SHFE lead 2502 contract. SHFE lead showed a trend of opening low and moving higher, while the domestic market was increasingly influenced by the Chinese New Year atmosphere. Some suppliers had already started their holidays, and the remaining ones were also preparing for the holiday, resulting in fewer spot order quotations. Meanwhile, cargoes self-picked up from production sites were sold at prevailing prices, with a few showing discounts (against the SMM 1# lead average price). However, most downstream enterprises had already started their holidays, with only a few making final inventory preparations, leading to sluggish market transactions. Some suppliers still showed a willingness to sell, with individual secondary refined lead quotations maintaining a discount of 75-0 yuan/mt against the SMM 1# lead average price ex-factory, but secondary lead transactions remained sluggish.

On January 23, LME lead inventory continued its downward trend, with a destocking of 1,800 mt to 229,425 mt, with the decline still coming from Singapore warehouses. According to SMM, as of January 23, the total social inventory of SMM lead ingots in five regions stood at 39,100 mt, down 7,600 mt from January 16 and down 6,800 mt from January 20.

》Click to view the SMM metal industry chain database

Lead Price Forecast Today:

With the arrival of the Little New Year in northern and southern China, more downstream enterprises are going on holiday, and the last batch of enterprises is expected to stop operations on January 27-28. At the beginning of the week, logistics vehicles gradually decreased, and most downstream enterprises had ceased purchasing lead ingots. Lead ingots ordered last week or earlier this week were transferred to downstream in-plant inventories. With the Chinese New Year approaching next week, logistics will come to a complete halt, spot transactions of lead ingots will be suspended, and the lead market will enter a state of nominal prices without actual transactions.