Secondary Lead Enterprises See Increase in Production Data, Cost Support May Extend Lead Price Consolidation Trend [SMM Lead Morning Meeting Summary]

Futures Market:

Last Friday, LME lead opened at $2,000/mt and fluctuated downward during the Asian trading session. Entering the European session, LME lead came under pressure and weakened to a low of $1,972.5/mt due to the strengthening US dollar. However, as shorts reduced positions, LME lead rebounded and reached a high of $2,011/mt before closing at $2,002.5/mt, up 1.03%.

On Friday night, the most-traded SHFE lead 2504 contract opened at 17,030 yuan/mt, briefly touching a high of 17,075 yuan/mt in early trading. Due to expectations of the traditional off-season for lead-acid batteries, longs reduced positions, causing SHFE lead to fluctuate downward and hit a low of 16,995 yuan/mt before closing at 17,020 yuan/mt, down 0.49%.

》Click to View SMM Lead Spot Historical Prices

Macro:

Market news indicated that Trump is considering using tariffs to counter digital taxes disliked by major tech companies. The 2025 Central Document No. 1 outlines plans to orderly advance pilot programs for extending the second round of land contracts by another 30 years after expiration, increase central budgetary investment, ultra-long-term special treasury bonds, and local government special bonds to support major projects in agriculture and rural areas, and implement a new round of rural road improvement initiatives. Premier Qiang Li presided over a State Council executive meeting, approving the "Action Plan for Improving the Recycling System of NEV Power Batteries."

Spot Fundamentals:

In the Shanghai market, Honglu lead was quoted at 17,105-17,130 yuan/mt, on par with the SHFE lead 2503 contract. In Jiangsu and Zhejiang regions, JCC and Jijin lead were quoted at 17,085-17,130 yuan/mt, with a discount of 20-0 yuan/mt against the SHFE lead 2503 contract. SHFE lead fluctuated upward, and suppliers showed relatively small differences in premiums and discounts. Meanwhile, ex-factory prices from smelters maintained a discount of 50 yuan/mt to a premium of 100 yuan/mt against the SMM 1# lead average price. The spread between futures and spot prices remained significant, prompting some suppliers to increase their willingness to transfer to delivery warehouses. Secondary refined lead prices saw an expanded discount, quoted at a discount of 100-0 yuan/mt against the SMM 1# lead average price ex-factory. Additionally, downstream enterprises mainly purchased as needed, with some rigid demand favoring low-priced primary lead due to price differences.

Inventory: On February 21, LME lead inventory increased by 1,025 mt to 220,125 mt. As of February 20, the total social inventory of lead ingots in five major regions monitored by SMM reached 59,600 mt, up by 7,300 mt from February 13 and 6,200 mt from February 17.

》Click to View SMM Metal Industry Chain Database

Lead Price Forecast Today:

The spread between lead futures and spot prices widened WoW. Even though the SHFE lead 2502 contract delivery has concluded, suppliers have not ceased transferring to delivery warehouses, and social inventory of lead ingots is expected to continue increasing. Meanwhile, secondary lead enterprises have ramped up production, further boosting demand for scrap batteries. This has made scrap battery prices more likely to rise than fall, providing cost support for lead prices. Under the influence of these two factors, lead prices are likely to maintain a high-level consolidation trend.