Weak consumption before the holiday dragged down lead prices, with subsequent focus on the production trends of ingot end [SMM Morning Lead Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,986/mt. During the Asian session, LME lead maintained consolidation, fluctuating between $1,980-1,990/mt. Entering the European session, shorts gradually increased positions, pushing LME lead into a downward fluctuation trend, hitting a low of $1,958/mt—the lowest in nearly a week—before the decline slowed towards the close. LME lead finally settled at $1,960/mt, down 1.43%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,700 yuan/mt. Initially, SHFE lead consolidated slightly around 16,700 yuan/mt, but as LME lead extended losses, shorts added positions during the session, causing SHFE lead to plunge sharply, hitting a low of 16,570 yuan/mt. The overall price center shifted downward, breaking below the lower boundary of the previous trading range, before settling at 16,600 yuan/mt, down 0.93%. Open interest rose to 50,375 lots, up 4,379 lots from the previous trading day.

》Click to View SMM Lead Spot Historical Quotes

Macro Update: The Trump administration scored a win: initially planning to escalate to the Supreme Court, an appeals court later approved the request, temporarily reinstating the tariff policy. Trump met with Powell—their first meeting since November 2019—demanding interest rate cuts, while Powell maintained policy independence. Separately, the US Fed’s Daly stated on Thursday that policymakers could still deliver two rate cuts this year as projected in March, but rates should remain stable for now to ensure inflation reaches the Fed’s 2% target.

Spot Fundamentals:

In yesterday’s lead spot market, SHFE lead remained weak and consolidating. Suppliers showed moderate selling interest, with fewer quotations than the previous day. In Jiangsu, Zhejiang, and Shanghai, quotations against the SHFE lead 2507 contract were at discounts of 30-0 yuan/mt. Meanwhile, mainstream producing regions saw primary lead smelters’ self-picked-up cargoes quoted at discounts of 60 yuan/mt to premiums of 100 yuan/mt against the SMM 1# lead average price. Secondary lead smelters exhibited strong reluctance to sell at low prices, with some quotations at discounts of 50-0 yuan/mt and others at premiums of 50-100 yuan/mt against the SMM 1# lead price. Downstream enterprises mostly adopted a wait-and-see approach, with some planning holidays and no urgent need to replenish spot orders before the festival. Spot market transactions showed no significant improvement.

Inventory Update: As of May 29, LME lead inventories fell by 2,500 mt to 288,550 mt. SMM lead ingot social inventories across five regions totaled 49,400 mt, down about 900 mt from May 22 but up 6,000 mt from May 26.

》Click to View SMM Metal Industry Chain Database

Today’s Lead Price Forecast:

Approaching the traditional Dragon Boat Festival holiday, suppliers generally accelerated shipments, with spot transactions mostly at discounts. The spread between futures and spot prices widened to around 200 yuan/mt, prompting some traders to transfer inventories to delivery warehouses. Lead ingot social warehouse inventories turned to an upward trend, weighing on lead prices. Meanwhile, some lead-acid battery enterprises plan to take a holiday ranging from 1 to 3 days during the Dragon Boat Festival. Coupled with the routine inventory check at month-end, the holiday period for some enterprises will extend up to 5 days. The absence of lead consumption during the holiday will further increase the risk of inventory buildup of lead ingots after the holiday. In addition, the supply of scrap batteries is tight, and some secondary lead smelters are facing critically low inventories of raw materials. Coupled with the factor of losses, attention should be paid to the production trends of smelters after the decline in lead prices.