Short-Term Lead Market Demand Lacks Drivers [Institutional Commentary]

Last Friday in the domestic spot market, some suppliers suspended shipments to stand firm on quotes. For instance, in Henan, the premium for primary lead was adjusted from a discount to a premium, ranging from 0-100 yuan/mt against the SHFE lead 2505 contract. Downstream restocking intentions improved as the weekend approached, and social inventory slightly decreased by 400 mt from Monday to Thursday. In terms of supply, scrap battery prices remained firm, and some recyclers halted purchases. However, the decline in lead prices outpaced that of scrap batteries, rapidly widening losses for secondary lead smelters and increasing their willingness to cut production. The lack of supply elasticity continued to support lead prices. However, since last week, the SHFE/LME price ratio has widened, opening the import window. Coupled with unresolved external macro risks, short-term pressure on domestic market prices remains. Therefore, it is advisable to maintain a wait-and-see approach in the short term and look for buying opportunities in the medium term.