Weak spot cargo performance drags down lead prices; focus on the impact of macro sentiment on lead prices [SMM Morning Lead Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,965/mt. During the Asian session, it briefly touched a low of $1,961.5/mt. As the US dollar index plunged, pressure on non-ferrous metals eased, and LME lead fluctuated upward during the European session, reaching a high of $1,994.5/mt towards the close. It eventually closed at $1,986.5/mt, up 1.12%.

Overnight, the most-traded SHFE lead 2506 contract opened higher with a gap at 16,900 yuan/mt. Early in the session, it briefly touched a high of 16,935 yuan/mt. However, due to concerns over the lead demand outlook, some short positions entered the market, causing SHFE lead to dip briefly to 16,830 yuan/mt. It slightly rebounded towards the close, eventually closing at 16,905 yuan/mt, up 0.57%.

》Click to view SMM historical spot lead quotations

Macro Aspects:

Trump stated that the alternative to not passing the tax bill is a significant tax increase. China's National Development and Reform Commission (NDRC) pointed out that "cut-throat competition" distorts market mechanisms and disrupts fair competition order, necessitating rectification; it also proposed further improving institutional mechanisms to promote the development of the private economy. Pan Gongsheng, Governor of the People's Bank of China, held and addressed a symposium on financial support for the real economy, emphasizing the implementation of a moderately accommodative monetary policy to meet the effective financing needs of the real economy and maintain reasonable growth in the total amount of finance. The May LPR quotations were released: both the 5-year and 1-year rates were lowered by 10 basis points.

Spot Fundamentals:

The center of SHFE lead prices gradually shifted downward. Suppliers' quoted premiums and discounts remained unchanged from the previous day. Additionally, in major production areas, smelters' quoted cargoes self-picked up from production sites were at discounts of 50 yuan/mt to premiums of 150 yuan/mt against the SMM 1# lead average price ex-factory. Quotations for secondary refined lead narrowed to discounts of 50-0 yuan/mt against the SMM 1# lead average price ex-factory, with premiums appearing in a few regions. Downstream enterprises' inquiry enthusiasm increased, with some purchasing on dips as needed, and some preferring cargoes self-picked up from primary lead smelters for their immediate needs.

Inventory: On May 20, LME lead inventory decreased by 600 mt to 245,750 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 SMM Metal Industry Chain Database

Today's Lead Price Forecast:

As the consumption of downstream lead-acid batteries has yet to improve, trading activity in the spot lead ingot market remains sluggish. Lead ingots are generally being shipped at parity or small discounts, with downstream purchase willingness still weak. Such market conditions are suppressing the production enthusiasm of smelters, especially as the operating rate of secondary lead has not shown significant recovery. Market expectations for the traditional peak season have declined, with short positions remaining on the sidelines and some longs exiting the market. Despite the weak spot performance dragging on lead prices, attention should still be paid to the impact of macro sentiment on lead prices in the near term.