Lead Ingot Supply Remains Loose, Demand Remains Stable [Institutional Commentary]

On Monday, the SHFE lead index closed up 1.03% at 17,038 yuan/mt, with the total open interest for one-sided trading at 74,200 lots. The average price of SMM1# lead ingot was 16,850 yuan/mt, the average price of secondary refined lead was 16,775 yuan/mt, the price difference between primary metal and scrap was 75 yuan/mt, and the average price of scrap EV battery was 10,250 yuan/mt. The SHFE lead ingot futures inventory recorded 43,600 mt, the domestic spot-futures price spread for primary lead was -75 yuan/mt, and the price spread between the continuous contract and the 1st contract after expiration of front-month contract was -5 yuan/mt. The LME market was closed on Monday.

Overall, primary supply remained high, while the supply of secondary raw materials was tight. The import window is approaching, and there may be an inflow of imported lead ingots, leading to a generally loose supply of lead ingots. Downstream battery enterprises maintained high operating rates, and overall demand remained stable. Current macro disturbances are receding, and the volatility of SHFE lead continues to decline. In the medium term, the SHFE lead index is expected to fluctuate within a range of 16,300-17,800, while short-term lead prices are holding up well.