Inventory Buildup and Off-Season Consumption Drag, Focus on the Integer Pressure Above Lead Prices [Institutional Commentary]

On Monday, the most-traded SHFE lead PB2505 contract fluctuated rangebound during the day, with its center slightly shifting downward at night, while LME lead also fluctuated rangebound. Spot market: In the Shanghai market, Chihong lead was quoted at 16,925-16,955 yuan/mt, with a premium of 50-80 yuan/mt against the SHFE lead 2505 contract; Honglu lead was quoted at 16,895-16,905 yuan/mt, with a premium of 20-30 yuan/mt against the SHFE lead 2505 contract; in the Jiangsu-Zhejiang region, JCC lead was quoted at 16,875-16,895 yuan/mt, at parity with the SHFE lead 2505 contract. SHFE lead maintained high-level consolidation, and as the delivery date approached, some suppliers waited for delivery, resulting in fewer market quotations, with some quoted at premiums. Downstream enterprises were cautious about high prices and made fewer purchases, with only some making just-in-time procurement. SMM: As of this Monday, social inventory stood at 66,600 mt, a decrease of 2,900 mt WoW.

Overall, some used battery recyclers halted purchases and adopted a wait-and-see approach, leading to tighter supply. Used battery prices rose slightly, and losses at secondary lead smelters widened, with some cutting or halting production, providing support for lead prices. However, as the monthly delivery approaches, inventory buildup pressure increases, lead ingot imports have started, and the expectation of imported supply inflows has strengthened. Additionally, during the off-season, battery enterprises in Anhui plan to lower their operating rates. With both bullish and bearish factors at play, lead prices are unlikely to see a trend in the short term, with attention focused on the resistance at key levels.