Cost Support and Import Threats Coexist, Short-Term Lead Prices Expected to Maintain Consolidation [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,904.5/mt. During the Asian session, dragged down by the decline in SHFE lead, LME lead fluctuated downward. Entering the European session, the US announced additional tariffs on China again, and LME lead inventories surged by 17,600 mt, intensifying the decline in LME lead, which fell to a low of $1,888.5/mt. After Powell's speech, the US dollar index weakened, and LME lead also retraced most of its losses, eventually closing at $1,904/mt, up 0.11%.

Overnight, the most-traded SHFE lead 2505 contract opened at 16,695 yuan/mt. At the beginning of the session, SHFE lead weakened slightly, falling to a low of 16,650 yuan/mt. However, supported by the firm prices of domestic scrap batteries and the cost support of secondary lead, SHFE lead rebounded to above 16,700 yuan/mt in the latter part of the trading session, eventually closing at 16,730 yuan/mt, down 0.12%. Its open interest stood at 30,144 lots, a decrease of 849 lots from the previous trading day.

》Click to view SMM lead spot historical quotes

Macro Perspective: China's Q1 GDP grew 5.4% YoY. US Fed Chair Powell reiterated that the Fed would wait and see before taking action, warning of the dual challenges of inflation and the economy, and denied any intention to rescue the market. Additionally, a fact sheet related to Section 232 released on the White House website mentioned that "China now faces tariffs of up to 245% on products imported into the US."

Spot Fundamentals:

In the lead spot market yesterday, SHFE lead continued to fluctuate weakly. Suppliers offered limited quotes, and as delivery cargoes had not yet re-entered the market, some suppliers stood firm on quotes. Primary lead smelters' ex-factory quotations were at discounts of 30 yuan/mt to premiums of 30 yuan/mt against the SMM 1# lead average price. The secondary lead market saw chaotic quotations, with some smelters reluctant to sell at low prices, while others offered at discounts. Secondary refined lead quotations were at discounts of 100-0 yuan/mt against the SMM 1# lead average price, with a few at premiums of 50 yuan/mt. Downstream enterprises, apart from just-in-time procurement, were mostly in a wait-and-see mode, with limited enthusiasm for inquiries, and spot order market transactions weakened compared to the previous day. In the trade market, quotations in Jiangsu, Zhejiang, and Shanghai were at premiums of 20-100 yuan/mt against the SHFE lead 2505 contract.

Inventory: As of April 16, LME lead inventories increased by 17,575 mt to 283,125 mt, the highest level since March 12, 2013. SHFE lead warrant inventories stood at 57,977 mt, a decrease of 401 mt from the previous day.

》Click to view SMM metal industry chain database

Today's Lead Price Forecast:

Recently, overseas LME lead inventories have been accumulating daily, with a buildup of 48,000 mt over the past week, putting pressure on lead prices. At the same time, as lead prices weakened, the robust demand for scrap batteries made their prices more likely to rise than fall, even rising against the trend, squeezing the smelting profits of secondary lead. Currently, secondary lead enterprises are generally in a loss-making state, which may provide support for lead prices. Additionally, the lead-acid battery market is in a deepening off-season, with producers cutting production. Attention should be paid to subsequent changes in lead ingot inventories and the lead ingot import window. In the short term, lead prices are expected to remain in a consolidation phase.