Spot Lead Market Supply Remains Ample, Lead Prices Maintain Fluctuating Trend [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $2,004.5/mt, fluctuated rangebound during the Asian session. Entering the European session, it briefly touched a high of $2,015/mt before declining, hitting a low of $1,981.5/mt at the end of the session, and finally closed at $1,985/mt, down 0.87%.

Overnight, the most-traded SHFE lead 2504 contract opened at a high of 17,180 yuan/mt. Due to long liquidation, it fluctuated downward, hitting a low of 17,085 yuan/mt at the end of the session and closing at 17,095 yuan/mt, down 0.09%.

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Macro:

Trump: Tariffs on Canada and Mexico will be imposed on schedule. According to foreign media reports, Mexico is considering imposing additional tariffs on countries without free trade agreements. Wu Qing, Chairman of the China Securities Regulatory Commission: Priority will be given to supporting technology enterprises in tackling key core technologies through equity and debt financing, mergers, and acquisitions.

Spot Fundamentals:

In the Shanghai market, Honglu lead was quoted at 17,085-17,110 yuan/mt, with discounts of 20-0 yuan/mt against the SHFE lead 2503 contract. In Jiangsu and Zhejiang regions, JCC and Jijin lead were quoted at 17,085-17,110 yuan/mt, with discounts of 20-0 yuan/mt against the SHFE lead 2503 contract. SHFE lead maintained a consolidating trend, and suppliers quoted prices accordingly. Some suppliers, due to the significant spread between futures and spot prices, preferred transferring to delivery warehouses, leading to relatively fewer quotations for cargoes self-picked up from production sites by primary lead smelters. Discounts narrowed slightly, quoted at discounts of 30 yuan/mt to premiums of 150 yuan/mt against the SMM 1# lead average price on an ex-factory basis. However, discounts for secondary refined lead widened, quoted at discounts of 100-50 yuan/mt against the SMM 1# lead average price on an ex-factory basis, with some as low as discounts of 150 yuan/mt. Meanwhile, downstream enterprises had limited rigid demand, with some focusing on long-term contract purchases, while spot order purchases were relatively cautious. Spot transactions showed no significant improvement.

Inventory: On February 24, LME lead inventory increased by 425 mt to 220,550 mt. As of February 24, the total social inventory of lead ingots in five major regions tracked by SMM reached 59,900 mt, up 6,600 mt from February 17 and approximately 400 mt from February 20.

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Lead Price Forecast Today:

Following the completion of the delivery of the SHFE lead 2502 contract last week, production at primary and secondary lead smelters has further recovered (including enterprises affected by the Chinese New Year break, equipment maintenance, and the commissioning of new capacity). The circulation of lead spot cargoes in the market remains relatively ample. During this period, the price spread between futures and spot prices in major production areas remained significant. Quotations for primary lead against the SHFE lead 2503 contract were generally at discounts of over 240 yuan/mt on an ex-factory basis. Suppliers showed increased reluctance to sell cargoes with large discounts, shifting from selling to transferring to delivery warehouses. In Henan, there were already reports of queuing for cargo pick-up and delivery warehouse transfers. Recently, lead ingots have been moving from in-plant inventory to social warehouses, and this "inventory transfer" is expected to continue in the short term, with social warehouse inventories of lead ingots likely to keep rising. Overall, lead prices are expected to maintain a fluctuating trend in the short term.