March Lead Market Supply and Demand Expected to Increase, Especially with New Capacity and Resumed Capacity of Secondary Lead Gradually Releasing [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $2,008.5/mt. During the Asian session, it was pressured to a low of $1,991/mt due to the high US dollar index. In the European session, it rebounded as shorts reduced positions, reaching a high of $2,015/mt before closing at $2,008/mt, up 0.22%.

Overnight, the most-traded SHFE lead 2504 contract opened at 17,140 yuan/mt. It initially rose to a high of 17,235 yuan/mt before plunging to a low of 17,115 yuan/mt. It slightly rebounded at the close, ending at 17,180 yuan/mt, up 0.09%.

》Click to View SMM Lead Spot Historical Prices

Macro:

Trump confirmed that tariffs on Mexico and Canada will take effect on March 4. US Fed's Harker stated that the policy does not appear to be significantly restrictive and may require maintaining interest rates unchanged for a considerable period. Current stock market valuations are relatively high. China's National Energy Administration noted that the cut-throat competition in the PV manufacturing industry has not been fundamentally resolved. The administration is working with the NDRC, MIIT, and other departments to study and improve policy measures.

Spot Market Fundamentals:

In the Shanghai market, Honglu lead was quoted at 17,090-17,110 yuan/mt, with discounts of 20-0 yuan/mt against the SHFE 2503 contract. In Jiangsu and Zhejiang regions, Yuguang, Jijin, and JCC lead were quoted at 17,090-17,110 yuan/mt, also with discounts of 20-0 yuan/mt against the SHFE 2503 contract. SHFE lead fluctuated at highs, and suppliers actively quoted for sales, mostly at discounts. Mainstream primary lead smelters offered ex-factory cargoes self-picked up at discounts of 50-0 yuan/mt against the SMM 1# lead average price, while secondary refined lead was quoted at discounts of 100-0 yuan/mt against the SMM 1# lead average price. Some discounts widened compared to the previous day. Downstream enterprises showed moderate post-holiday enthusiasm, with some making inquiries as per usual practices, but actual purchases were limited, and spot order transactions were weak.

Inventory: On February 27, LME lead inventory decreased by 1,600 mt to 216,350 mt. As of February 27, the total social inventory of lead ingots in five regions monitored by SMM reached 63,100 mt, up by 3,500 mt from February 20 and by 3,100 mt from February 24.

》Click to View SMM Metal Industry Chain Database

Lead Price Forecast Today:

Recently, with the resolution of maintenance and other factors, the supply of primary and secondary lead has increased, while demand in the lead-acid battery sector has shown little marginal change. Spot market circulation remains relatively ample, with most transactions conducted at discounts. Due to the significant spread between futures and spot prices, suppliers have concentrated on picking up goods for transfer to delivery warehouses. Smelters have shifted in-plant inventory to social warehouses, pushing total social inventory to a three-month high. Additionally, entering March, with the Chinese New Year holiday effects dissipating, the lead market's supply and demand are expected to increase simultaneously. In particular, new and resumed secondary lead capacity is expected to gradually ramp up, and lead prices may fluctuate rangebound.