Fundamental Imbalance Between Bulls and Bears Stalemates, Lead Prices May Continue High-Level Fluctuation [SMM Lead Morning Meeting Summary]

Futures Market:

Last Friday, LME lead opened at $2,003.5/mt. During the Asian trading session, the market saw sluggish trading, and LME lead's trading center slightly shifted downward, dragged by the weak SHFE lead. However, it mostly hovered in a consolidation pattern. Entering the European session, LME lead rebounded, but as expectations for an escalation in the trade war intensified, base metals generally declined. LME lead also experienced consecutive drops during the night session, eventually closing at $1,987/mt, down by 1.05%.

Last Friday, the most-traded SHFE lead 2504 contract opened at 17,190 yuan/mt. In the early session, SHFE lead surged strongly, reaching a high of 17,280 yuan/mt. Although it briefly pulled back to around 17,200 yuan/mt due to the decline in LME lead, it maintained a high-level fluctuation in the latter half of the session. SHFE lead eventually closed at 17,240 yuan/mt, up by 0.29%. Its open interest reached 48,467 lots, an increase of 615 lots compared to the previous trading day. In terms of the lead fundamentals, unexpected maintenance at some delivery brand enterprises led to a decline in smelters' in-plant inventory, while social warehouses reached a three-month high, limiting the upward space for lead prices.

》Click to View SMM Lead Spot Historical Prices

Macro Perspective: The PBOC and four other departments announced support for private enterprises to grow and strengthen through the capital market, with significant efforts to address the difficulties and high costs of financing for private enterprises. The US Commerce Secretary stated that tariffs on Canada and Mexico would be imposed on March 4, with the tariff level to be decided by Trump, potentially below 25%. Meanwhile, after disputes in the White House, various parties expressed their views: Trump was accused of being "disrespectful to the US," Zelensky refused to apologize, Russia questioned, "Why no action?" and the EU declared, "Standing with Ukraine." The UK Prime Minister publicly expressed firm support for Ukraine and signed a £2.26 billion loan agreement, while privately warning Zelensky to repair relations with Trump. Russia is seeking to restart Nord Stream 2 with US support.

Spot Market Fundamentals :

Last Friday in the lead spot market, SHFE lead fluctuated upward. Suppliers' quotations showed little difference in premiums and discounts, while ex-factory quotations for cargoes self-picked up from production sites remained stable. Primary lead was quoted at discounts of 50-0 yuan/mt against the SMM 1# lead average price, and secondary refined lead was quoted at discounts of 100-0 yuan/mt against the SMM 1# lead average price. Additionally, as it was Friday, some downstream buyers made purchases as needed, slightly improving spot order transactions, though warehouse warrant transactions remained limited. In the trade market, quotations in Jiangsu, Zhejiang, and Shanghai were on par with or at discounts of 20-0 yuan/mt against the SHFE 2503 contract.

Inventory: As of February 28, LME lead inventory decreased by 2,000 mt to 194,425 mt. As of February 27, the total social inventory of lead ingots in five regions monitored by SMM reached 63,100 mt, an increase of 3,500 mt compared to February 20 and an increase of 3,100 mt compared to February 24.

》Click to View SMM Metal Industry Chain Database

Lead Price Forecast for Today:

Entering March, the impact of the Chinese New Year holiday has dissipated, and the overall supply and demand in the lead market are expected to increase. From the weekly marginal changes, the supply side is expected to see a slight increase, while the demand side is likely to remain stable. The visible inventory of lead ingots still has room for accumulation. On the other hand, raw material supply remains tight, and due to expectations for production increases on the supply side, prices of raw materials such as scrap remain relatively firm. The stalemate between bullish and bearish factors is unlikely to be broken in the short term.