Caught between Tight Raw Material Supply and Weak Consumption, Lead Prices May Remain in a Stalemate [SMM Morning Lead Meeting Summary]

Futures Market Overview:

Last Friday, LME lead opened at $1,971.5/mt. During the Asian session, LME lead traded sideways, mostly consolidating within the range of $1,985-1,990/mt. However, as the market entered the European session, the US dollar strengthened, putting pressure on non-ferrous metals. LME lead fell to $1,975/mt. Later, supported by destocking of lead ingots, LME lead gradually recovered its losses and approached the $2,000/mt mark, eventually closing at $1,994/mt, up 1.53%. Additionally, today is a bank holiday in the UK, so the LME lead market will be closed for the day.

Last Friday, the most-traded SHFE lead 2507 contract opened at 16,835 yuan/mt. With the reduction in lead ingot inventory, SHFE lead surged to 16,870 yuan/mt in the early session. However, due to the lingering weakness in the off-season, SHFE lead lacked upward momentum and traded sideways within the range of 16,800-16,850 yuan/mt in the latter half of the session, eventually closing at 16,850 yuan/mt, up 0.45%. Its open interest stood at 46,061 lots, a decrease of 1,318 lots from the previous trading day.

》Click to view historical SMM lead spot quotes

Macro Aspects: On Friday, Trump threatened to impose a 50% tariff on the EU starting from June 1. After a call with von der Leyen on Sunday, Trump extended the deadline for EU tariffs to July 9. Von der Leyen stated that Europe is ready to advance negotiations swiftly and decisively. Following Trump's tariff threats, risk aversion sentiment intensified, driving up US Treasury bond prices. The yield on two-year US Treasury bonds hit a two-week low during the session, while gold rebounded by 2%, and gold futures gained over 5% for the week. After Bassett's remarks, US stock market losses narrowed, and US Treasury yields rebounded somewhat. The US dollar index hit a new low for the month, the yen strengthened by over 1%, and the offshore yuan strengthened by over 300 points during the session, breaking through 7.18 and hitting a six-month high.

Spot Market Fundamentals:

In the lead spot market last Friday, SHFE lead prices initially dipped before rebounding. Suppliers shipped goods in line with market conditions, with discounts remaining unchanged from the previous trading day. In the Jiangsu, Zhejiang, and Shanghai regions, quotations were at a discount of 20-0 yuan/mt against the SHFE lead 2506 contract. In major producing areas, electrolytic lead smelters offered cargoes self-picked up from production sites at a discount of 50 yuan/mt to a premium of 150 yuan/mt against the SMM 1# lead average price. Secondary lead smelters showed a wait-and-see attitude, either halting shipments or refusing to budge on prices. Secondary refined lead was offered at a discount of 50-0 yuan/mt to a premium of 50-100 yuan/mt against the SMM 1# lead price ex-factory. Downstream enterprises maintained purchasing as needed, with transactions being moderate in some regions but still sluggish in most areas. Additionally, in the trade market...

Inventory: As of May 23, LME lead inventory decreased by 1,800 mt to 294,025 mt. The total weekly inventory of SHFE lead ingots stood at 48,428 mt, a decrease of 2,278 mt from the previous week.

》Click to view the SMM Metal Industry Chain Database

Today's Lead Price Forecast:

Following the delivery of SHFE lead contracts in the early stage, cargoes have re-entered the market. Downstream enterprises are purchasing as needed, leading to a decline in visible lead ingot inventory, which provides some room for lead prices to rebound. Recently, secondary lead smelters have collectively reduced the collection prices for scrap batteries. The easing of scrap costs led traders to significantly increase their short positions for a time, causing the center of lead price movement to shift downward compared to the previous week. It is understood that the commissioning and production resumptions of new secondary lead capacity have been gradually advancing recently, further increasing the demand for scrap. Against the backdrop of strong demand, the cost factors of secondary lead provide strong support, and it is expected that lead prices will continue to fluctuate.