Refined Lead Supply Sees Mixed Changes, Lead Prices Fluctuate at Highs [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,929/mt, fluctuating rangebound during the Asian session, then fluctuating upward during the European session to touch a high of $1,950/mt, finally closing at this level, up $35/mt, a gain of 1.83%.

Overnight, the most-traded SHFE lead 2506 contract opened at 16,965 yuan/mt, fluctuating upward at the start of the session to touch a high of 17,000 yuan/mt, then pulling back and consolidating under the intraday moving average, lightly touching a low of 16,920 yuan/mt, finally closing at 16,950 yuan/mt, up 80 yuan/mt, a gain of 0.47%.

Macro side, the US dollar index rose 0.93% overnight to 99.9. Market appetite for risk assets improved after US President Trump said he did not plan to fire the Fed Chairman, and trade tensions eased. OPEC+ is reportedly considering accelerating production increases for the second consecutive month in June. China Passenger Car Association: National passenger car market retail sales from April 1-20 were 897,000 units, up 12% YoY.

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Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted at premiums of 50-100 yuan/mt against the SHFE lead 2505 contract, Jijin lead was quoted at premiums of 0-30 yuan/mt against the SHFE lead 2505 contract; in the Jiangsu-Zhejiang region, JCC lead was quoted at premiums of 0-30 yuan/mt against the SHFE lead 2505 contract. SHFE lead was in the doldrums, but supported by costs such as scrap, with strong support below. Suppliers followed the market to sell, with large divergences in quotes, a small portion standing firm on premium quotes, others selling at parity. Ex-factory primary lead cargoes were generally sold at discounts (against the SHFE lead 2505 contract). In the secondary lead market, quotes varied widely, with price spreads in the same region reaching 100 yuan/mt. Secondary refined lead was quoted at discounts of 100-0 yuan/mt against the SMM 1# lead average price ex-factory. Downstream enterprises gradually purchased as needed at low prices, with increased inquiry enthusiasm, and spot market activity was slightly better than yesterday.

Inventory side: LME inventory decreased by 4,200 mt to 277,075 mt, with the main decrease coming from the Kaohsiung warehouse. According to SMM, as of April 21, SMM lead ingot social inventory in five regions totaled 54,600 mt, down 12,000 mt from April 14; down 8,300 mt from April 17.

Today's Lead Price Forecast:

Fundamentals side, lead prices weakened in early trading yesterday, but mainstream scrap battery quotes did not follow the decline. The scrap battery supply index is at a historical high, secondary refined lead smelters are feeling suffocated, manufacturers are reluctant to sell and are waiting, spot quotes remain firm. On the primary lead side, smelters in Henan that had maintenance and production cuts resumed production this week, with discounts on Henan primary lead slightly expanding mid-week. On the consumption side, battery companies' enthusiasm for pre-Labour Day holiday stockpiling is poor, market sentiment is cautious, and short-term lead prices may continue to consolidate.

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