Imported Lead Disrupts Domestic Balance, Focus on Cost Support for Lead Prices [SMM Lead Morning Meeting Summary]

Futures Market:

On Friday, LME lead opened at $2,054/mt. After the US Fed's interest rate meeting signaled no quick rate cuts, the US dollar index hit a two-week high, and non-ferrous metals generally turned negative. LME lead fell sharply for two consecutive days, nearly erasing all gains from the previous two weeks, with the intraday low reaching $2,015/mt. Towards the end of the session, some shorts took profits, and LME lead finally closed at $2,027/mt, down 1.1%.

On Friday, the most-traded SHFE lead 2505 contract opened at 17,430 yuan/mt. Affected by the decline in LME lead and the inventory buildup of domestic lead ingots, SHFE lead fluctuated downward. With lead profits significantly shrinking, some traders focused on cost support. In the latter part of the trading session, SHFE lead consolidated around the 20-day average price, closing at 17,395 yuan/mt, down 0.43%; its open interest reached 61,352 lots, a decrease of 41 lots from the previous trading day.

》Click to view SMM historical lead spot prices

Macro: The PBOC Q1 monetary policy meeting suggested increasing the intensity of monetary policy regulation, strengthening the implementation and supervision of interest rate policies, and considering RRR cuts and interest rate cuts. It also emphasized monitoring long-term yield changes from a macro-prudential perspective and researching innovative structural tools. The 2025 China Development Forum Annual Meeting opened, with Li Qiang delivering a keynote speech, stating that new incremental policies would be introduced if necessary. Lan Foan noted that the central government would use "real money" to boost consumption, coordinating tax incentives, government procurement, and investment funds to foster the growth of emerging and future industries. Additionally, the "new Fed whisperer" indicated that the Fed's predictions pointed to "stagflation," with expectations for "near-term rate cuts" changing, while investors' reactions were slow.

Spot Fundamentals:

In the lead spot market on Friday, SHFE lead pulled back, especially in the latter part of the trading session, with the center of SHFE lead prices shifting lower, almost erasing all gains from the previous day. Downstream enterprises increased inquiries, and purchasing varied among companies. Some remained cautious, while others mainly purchased under long-term contracts at month-end, or bought as needed at lower prices, leading to a relatively improved trading atmosphere. Mainstream electrolytic lead smelters quoted ex-factory premiums of 50-150 yuan/mt against the SMM 1# lead price. In the trading market, Jiangsu, Zhejiang, and Shanghai regions quoted discounts of 40-0 yuan/mt against the SHFE lead 2504 contract, or premiums of 0-50 yuan/mt against the SHFE lead 2503 contract. Additionally, secondary refined lead was quoted at discounts of 200-0 yuan/mt against the SMM 1# lead average price, with some expanding discounts due to panic, while others held firm on quotes due to cost considerations.

Inventory: As of March 21, LME lead inventory decreased by 175 mt to 232,250 mt; SHFE lead weekly inventory was 67,437 mt, an increase of 1,956 mt from the previous week.

》Click to view SMM metal industry chain database

Lead Price Forecast for Today:

After the delivery of the SHFE lead 2503 contract last week, the impact of lead ingot transfer to delivery warehouses on lead prices may weaken. Meanwhile, imported lead is gradually arriving and entering the spot market, providing a new source of supply. Following the pullback in domestic lead prices, the imbalance in the scrap battery market supply intensified, with smelting profits significantly shrinking, or even turning into losses, potentially providing some cost support for lead prices.