US dollar index rebounds to catch up, LME lead dives overnight [SMM Lead Morning News]

SMM May 20:

Overnight, LME lead opened at $1,997/mt, touching a high of $2,009/mt in the Asian session. As the US dollar index rebounded and caught up, LME lead plunged in 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 performance of domestic lead consumption 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%.

Recently, the lead-acid battery market has remained in the off-season, with most downstream enterprises in a state of production cuts, leading to limited demand for lead ingots. Meanwhile, primary lead enterprises have maintained stable production. Coupled with a slight improvement in secondary lead profits, new capacity has been commissioned in secondary lead enterprises in Hunan and Guizhou provinces, resulting in a steady increase in supply. The spot market has generally been trading at a discount, with secondary refined lead quotations against the SMM 1# lead average price at a discount of 130-0 yuan/mt ex-factory, diverting some of the downstream rigid demand. Primary lead quotations against the SHFE lead 2506 contract were at a discount of 200-80 yuan/mt ex-factory. The large spread between futures and spot prices has increased suppliers' willingness to transfer to delivery warehouse. After the delivery of the SHFE lead 2505 contract last week, delivery brand supplies continued to shift to social warehouses, and social inventory continued to increase. In addition, some imported crude lead has recently arrived in China, which may partially fill the scrap supply gap for secondary lead enterprises. Combined with the commissioning of new capacity, there is still pressure for inventory buildup of lead ingots in the future. Overall, the upward momentum of lead prices in the short term is insufficient, and prices may remain in the doldrums.