Macro and Fundamentals Rotation: Short-Term Lead Prices May Hover at Highs [SMM Lead Morning Meeting Summary]

Futures Market:

Last Friday, LME lead opened at $1,991/mt. Driven by the rise in SHFE lead, LME lead fluctuated upward, reaching an intraday high of $2,020.5/mt, the highest level in nearly two months. However, as the US dollar index strengthened overnight, base metals came under pressure, and LME lead reversed its gains, falling back below $2,000/mt and closing at $1,990/mt, up 0.08%.

Last Friday, the most-traded SHFE lead 2503 contract opened at 17,210 yuan/mt. Despite the post-holiday inventory buildup of lead ingots, SHFE lead remained strong, briefly reaching 17,225 yuan/mt during the session, marking a one-and-a-half-month high. In subsequent trading, SHFE lead hovered between 17,150-17,200 yuan/mt, eventually closing at 17,170 yuan/mt, up 0.47%. Its open interest stood at 44,940 lots, down 160 lots from the previous trading day.

》Click to View SMM Lead Spot Historical Prices

Macro: In January, China's CPI rose 0.5% YoY, while PPI fell 2.3% YoY. Due to the Chinese New Year, the national CPI growth expanded, and core CPI, excluding food and energy prices, rebounded for the fourth consecutive month. According to foreign media reports, US President Trump stated on February 7 local time that he would announce reciprocal tariff measures next week, imposing a 25% tariff on all steel and aluminum imports.

Spot Market Fundamentals:

Last Friday, in the lead spot market, SHFE lead hovered at highs, prompting suppliers to actively sell, with premiums being lowered. Similarly, ex-factory premiums from smelters were also reduced, and spot quotations in South China saw significant adjustments. Some secondary lead enterprises had not yet resumed production, keeping secondary refined lead quotations relatively firm, with mainstream regions quoting near parity with the SMM 1# lead average price. Additionally, downstream enterprises increased production resumption, with inquiries slightly higher than the previous day, though still primarily focused on digesting inventory. Spot order transactions showed no significant improvement. Specifically, ex-factory quotations for primary lead cargoes self-picked up from production sites were at premiums of 0-150 yuan/mt against the SMM 1# lead average price. In the trade market, quotations in Jiangsu, Zhejiang, and Shanghai were at discounts of 30-0 yuan/mt against the SHFE 2502 contract or premiums of 0-30 yuan/mt against the SHFE 2503 contract. Secondary refined lead was quoted at discounts of 50 yuan/mt to premiums of 50 yuan/mt against the SMM 1# lead average price, ex-factory.

Inventory: As of February 8, LME lead inventory increased by 400 mt to 221,725 mt. As of February 6, the total social inventory of lead ingots in five major regions monitored by SMM reached 47,600 mt, up 4,400 mt from January 23 and up 4,300 mt from January 27.

》Click to View SMM Metal Industry Chain Database

Lead Price Forecast Today:

During the Chinese New Year, upstream and downstream enterprises had varying holiday schedules, leading to a post-holiday inventory buildup of lead ingots in the domestic market, which inherently does not support strong lead prices. Against this backdrop, the spread between futures and spot prices widened, with the spread in major production areas once expanding to 200 yuan/mt, increasing suppliers' willingness to transfer to delivery warehouses. Lead ingots shifted from in-plant inventory to social warehouses, resulting in a significant visible inventory buildup. This week, downstream enterprises are expected to resume production, potentially driving some restocking demand. Attention should be paid to the pace of lead ingot destocking in the coming days.