Macro Factors Influence SHFE Lead Rebound [Institutional Commentary]

【Market Review】

1. Futures: The SHFE lead 2505 contract rose 1.97% to 16,800 yuan/mt today, while the open interest of the SHFE lead index decreased by 7,357 lots to 81,800 lots.

2. Spot Market: The SMM 1# lead average price increased by 250 yuan/mt to 16,700 yuan/mt compared to yesterday. Suppliers of refined lead showed an increased willingness to sell, though some remained cautious, awaiting further price increases. The price difference between primary metal and scrap was 25 yuan/mt. The ex-factory prices of refined lead were mostly at parity, with some sources at a discount of around 50 yuan/mt ex-factory or a premium of 50 yuan/mt delivered to nearby downstream customers.

【Related News】

1. According to SMM, as of April 10, the total social inventory of lead ingots in five regions was 69,500 mt, a decrease of over 500 mt compared to April 3 and a reduction of about 400 mt compared to April 7.

【Logical Analysis】

In April, domestic primary lead smelters underwent maintenance, while secondary lead smelters faced raw material shortages, and the price of used lead-acid batteries remained high. In the short term, supply may decrease. The traditional off-season for lead-acid battery replacement has led to weaker lead consumption. Recently, there have been signs of the import window opening, and the import situation should be closely monitored.

【Trading Strategy】

1. Unilateral: Short-term macro factors may lead to a rebound in lead prices. Attention should be paid to the impact of the opening of the import window on the domestic market, as there is a risk of further price declines.

2. Arbitrage: Temporarily on hold.

3. Options: Temporarily on hold.