Lead Costs and Weak Consumption at a Stalemate, Lead Prices Expected to Remain in a Consolidation Phase [SMM Morning Lead Meeting Summary]

Futures Market Overview:

Overnight, LME lead opened at $1,985.5/mt. The market trading direction remained unclear, and trading activity on the futures market was sluggish. Coupled with the high inventory pressure, LME lead prices were in the doldrums throughout the day, mostly consolidating between $1,975-1,980/mt. Towards the end of the session, influenced by domestic and overseas market movements, LME lead prices quickly recovered from their losses, eventually closing at $1,989/mt, up 0.03%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,730 yuan/mt. Bulls and bears were locked in a stalemate in early trading, with SHFE lead prices consolidating between 16,725-16,750 yuan/mt for an extended period. Later, as the session neared its close, bears relatively concentrated on reducing their positions, pushing SHFE lead prices to touch 16,800 yuan/mt. Ultimately, SHFE lead closed at 16,780 yuan/mt, up 0.21%, with open interest reaching 47,918 lots, a decrease of 1,103 lots from the previous trading day.

》Click to view historical SMM lead spot price quotations

Macro Aspects: Trump Renews Pressure: Harvard University should set a 15% cap on the number of international students, instead of the current 31%. Fed Minutes: Higher uncertainty warrants a cautious approach to interest rate cuts, with nearly all members mentioning inflation risks and reiterating the potential for "difficult trade-offs". "New Fedwire": Given the increased uncertainty surrounding tariff policies, the Fed reiterated the need for a "cautious stance". The 5-year US Treasury auction was impressive, with overseas demand reaching a record high. The results of Japan's 40-year government bond auction were released, with the bid-to-cover ratio hitting a new low since July 2024, but still outperforming last week's auction.

Spot Market Fundamentals:

In yesterday's lead spot market, SHFE lead prices continued to be in the doldrums. Suppliers shipped goods according to market conditions, with quotes in the Jiangsu, Zhejiang, Shanghai region offered at discounts of 30-0 yuan/mt against the SHFE lead 2506/2507 contracts. In major producing areas, quotes for cargoes self-picked up from primary lead smelters widened their discounts, ranging from discounts of 60 yuan/mt to premiums of 100 yuan/mt against the SMM 1# lead average price, ex-factory. Secondary lead smelters, affected by falling lead prices, reduced their quotes compared to the previous day. Some spot orders were offered at discounts of 75-0 yuan/mt against the SMM 1# lead price, ex-factory, with some premiums ranging from 25-75 yuan/mt. Downstream enterprises adopted a wait-and-see attitude, making cautious purchases, with a few buying at lower prices. Overall market transactions remained sluggish.

Inventory: As of May 28, LME lead inventory decreased by 1,325 mt to 291,050 mt. Total SHFE lead ingot warrant inventory reached 37,498 mt, an increase of 199 mt from the previous day.

》Click to view the SMM Metal Industry Chain Database

Today's Lead Price Forecast:

As the Dragon Boat Festival holiday approaches, some lead-acid battery enterprises plan to take 1-3 days off. Downstream enterprises' purchasing enthusiasm is weak before the holiday, and the continuous accumulation of lead ingot warrant inventory is dragging lead prices down. With no hope for a price drop in scrap batteries, the losses of secondary lead smelters have widened again, dampening their production and shipping enthusiasm. The price inversion between secondary refined lead and primary lead persists, with the cost support of secondary lead remaining effective. With a mix of bullish and bearish factors, lead prices may continue to consolidate in the short term.