Expectations for production cuts coupled with off-season consumption lead to a decline in both supply and demand in the lead market [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,986/mt. During the Asian session, it fluctuated upward. After entering the European session, it faced resistance at $2,000/mt and consolidated sideways before fluctuating downward to a low of $1,963/mt. It eventually closed at $1,965.5/mt, down $20/mt or 1.01%.

Overnight, the most-traded SHFE lead contract opened at 16,940 yuan/mt. After touching a high of 17,000 yuan/mt in the early session, it trended downward to a low of 16,910 yuan/mt and eventually closed at 16,920 yuan/mt, down 5 yuan/mt or 0.03%.

Macro Aspects: According to CCTV News, on May 12 local time, the US Treasury Department announced a new round of sanctions related to Iran. Starting from May 13, US President Trump will embark on a three-country tour of the Middle East, visiting Saudi Arabia, the UAE, and Qatar. The Washington Post reported on the 12th that this is "Trump's first major international trip since his second term," and the visit is expected to focus on strengthening trade relations. Meanwhile, subtle changes have emerged between the US and Israel.

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Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted at a premium of 0-20 yuan/mt against the SHFE lead 2506 contract; Honglu lead was quoted at a discount of 30-10 yuan/mt against the SHFE lead 2506 contract; JCC and Jinde lead in the Jiangsu-Zhejiang region were quoted at a discount of 20-0 yuan/mt against the SHFE lead 2505 or 2506 contracts. With positive progress in Sino-US trade negotiations, non-ferrous metals generally strengthened, and SHFE lead also fluctuated upward, approaching the 17,000 yuan/mt threshold. Suppliers were mostly active in selling, with premiums and discounts being lowered. Additionally, the discounts for cargoes self-picked up from primary lead smelters against futures quotes showed relatively small differences WoW. Due to production cuts at smelters, there were limited quotes for secondary lead. Some secondary refined lead was quoted at a premium of 50 yuan/mt ex-factory against the SMM 1# lead average price. Downstream enterprises made just-in-time procurement only, and some discounted cargoes could be traded to a certain extent.

Inventory: As of May 9, LME lead inventory fell by 1,625 mt to 251,800 mt, with the entire decline coming from Singapore warehouses. According to SMM, as of May 12, the total social inventory of lead ingots in five regions tracked by SMM reached 47,100 mt, an increase of 1,200 mt from May 6 and a decrease of over 400 mt from May 8.

Today's Lead Price Forecast:

This week, the SHFE lead 2505 contract is about to enter delivery. However, suppliers are mainly focusing on spot sales, with relatively low intentions to transfer to delivery warehouses, leading to a slight decline in social inventory. Recently, secondary lead smelters have suffered severe losses, compounded by insufficient scrap battery supply. Secondary lead enterprises in regions such as Anhui, Jiangsu, and Jiangxi have generally experienced production cuts or suspensions. Boosted by the macroeconomic environment, lead prices have rebounded. The losses of secondary lead smelters have slightly improved compared to last week. It is still necessary to continue monitoring the dynamics of production cuts at secondary lead enterprises and the transfer of delivery brands to delivery warehouses.

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