Futures Market Overview:
Overnight, LME lead opened at $1,997/mt, touching a high of $2,009/mt during the Asian session. However, due to the rebound and catch-up rally of the US dollar index, LME lead plunged during the European session, hitting a low of $1,957/mt at the close, and eventually closed at $1,964.5/mt, down 2.07%.
Overnight, the most-traded SHFE lead 2506 contract opened at 16,860 yuan/mt, touching a high of 16,880 yuan/mt in the early session. Dragged down by the domestic lead consumption performance and the decline in LME lead, SHFE lead hit a low of 16,780 yuan/mt at the close, and eventually closed at 16,780 yuan/mt, down 0.71%.
》Click to view historical SMM lead spot quotes
Macro Aspects:
Atlanta Fed President Bostic reiterated his preference for only one interest rate cut this year; New York Fed President Williams stated that recent economic data has been very good, with the key word for the economy being uncertainty; Fed Vice Chair Jefferson said that Moody's downgrade of the US rating should be treated as general data for policy formulation; Dallas Fed President Logan suggested that the Fed should consider strengthening mechanisms to more effectively prevent money market interest rates from surging during market stress. China's State Administration of Foreign Exchange stated that foreign investors net increased their holdings of domestic bonds by $10.9 billion in April, and foreign investment in domestic stocks turned to net purchases in late April; China's foreign trade has shown certain resilience, and foreign investors' willingness to allocate RMB assets continues to improve.
SHFE lead prices were in the doldrums. Suppliers adjusted their quotes in line with market conditions, with some premium quotes being lowered, while others remained unchanged from last Friday. Additionally, the ex-factory quotes for cargoes self-picked up from production sites at primary lead smelters in major producing areas were maintained at a discount of 50 yuan/mt to a premium of 100 yuan/mt against the SMM 1# lead average price. The quotes for secondary refined lead were at a discount of 130-0 yuan/mt against the SMM 1# lead average price. Downstream enterprises only made just-in-time procurement, with some large enterprises primarily purchasing through long-term contracts, and the spot order market saw sluggish transactions.
Inventory: On May 19, LME lead inventory decreased by 2,500 mt to 246,350 mt. As of May 19, the total social inventory of lead ingots in five regions tracked by SMM reached 59,100 mt, an increase of 12,000 mt from May 12 and an increase of 3,100 mt from May 15.
》Click to view the SMM Metal Industry Chain Database
Today's Lead Price Forecast:
Recently, the lead-acid battery market has remained in the off-season, with downstream enterprises mostly in a state of production cuts, leading to limited demand for lead ingots. Meanwhile, primary lead production has remained stable, and with a slight improvement in secondary lead profits, new capacity has come online at secondary lead enterprises in Hunan and Guizhou provinces, leading to a steady increase in supply. The spot market is generally trading at a discount, with secondary refined lead quotes at a discount of 130-0 yuan/mt against the SMM 1# lead average price, diverting some downstream just-in-time demand. Primary lead quotes are at a discount of 200-80 yuan/mt against the SHFE lead 2506 contract, and the large spread between futures and spot prices has increased suppliers' willingness to transfer to delivery warehouses. After the delivery of the SHFE lead 2505 contract last week, delivery brand cargoes continued to transfer to social warehouses, and social inventory continued to increase. Recently, some imported crude lead has arrived in China, which may partially fill the scrap supply gap for secondary lead enterprises. Coupled with the commissioning of new capacity, there will still be inventory buildup pressure for lead ingots in the future. Overall, the upward momentum of lead prices is insufficient in the short term, and prices may remain in the doldrums.
