Inventory Buildup Expected to Rise After Labour Day Holiday, Lead Prices May Remain in the Doldrums [[SMM Morning Lead Meeting Summary]]

Futures Market:

Last Friday, LME lead opened at $1,954.5/mt. Trading was sluggish in the Asian session, with LME lead prices mostly consolidating between $1,960-1,970/mt. As the market entered the European session, the center of LME lead prices gradually shifted lower to around $1,955/mt, and even dipped to $1,930/mt near the close, hitting a one-week low. LME lead eventually closed at $1,931.5/mt, down 1.3%.

SHFE lead was closed for the Labour Day holiday in the domestic market and will resume normal trading today (May 6).

》Click to view historical spot quotes for SMM lead

Macro: During the Labour Day holiday, sales at key retail and catering enterprises nationwide increased by 6.3% YoY. Sales of home appliances, automobiles, and communication equipment at key monitored retail enterprises by the Ministry of Commerce of China increased by 15.5%, 13.7%, and 10.5% YoY, respectively. Additionally, Xinhua News Agency reported that Trump said he would impose a 100% tariff on all movies made abroad, with US authorities claiming the new tariff would kill the US film industry.

Spot Market Fundamentals:

In the spot lead market before the holiday, SHFE lead prices were weak and consolidating. Suppliers adjusted their quotes accordingly, with a few halting quotes as the holiday approached. During this period, discounts for cargoes self-picked up from primary lead smelters widened, with mainstream producing areas quoted at discounts of 220-100 yuan/mt ex-factory against the SHFE lead 2506 contract. Secondary lead smelters had varying shipments, with both price-holding and dumping situations coexisting. Secondary refined lead was quoted at discounts of 100 yuan/mt to premiums of 50 yuan/mt ex-factory against the SMM 1# lead average price. Downstream enterprises gradually entered holiday mode, with fewer inquiries. However, some enterprises still purchased on a need basis at low prices, and spot market transactions varied regionally. In the trade market, warehouse cargoes in the Jiangsu, Zhejiang, Shanghai region were quoted at premiums of 0-50 yuan/mt against the SHFE lead 2505 contract.

Inventory: As of May 2, total LME lead inventory stood at 264,125 mt, down 1,475 mt from before the holiday. As of April 30, weekly SHFE lead ingot inventory was 46,786 mt, up 1,132 mt from the previous week.

》Click to view the SMM Metal Industry Chain Database

Today's Lead Price Forecast:

Based on the holiday schedules of upstream and downstream enterprises in the lead industry chain, downstream lead-acid battery enterprises had longer holidays than lead smelters. Weakening consumption may raise expectations for post-holiday lead ingot inventory buildup. Meanwhile, the supply of raw materials such as lead concentrates and scrap is tight, making it difficult for lead smelters to procure, especially with scrap battery prices remaining high. Secondary lead enterprises are generally operating at a loss, dampening production enthusiasm. Lead prices are expected to remain in the doldrums in the short term.