Futures Market Overview:
Overnight, LME lead opened at $1,978.5/mt. During the Asian session, it fluctuated downward. Entering the European session, it rose to a high of $1,986.5/mt before closing at $1,986/mt, up $5/mt or 0.25%.
Overnight, the most-traded SHFE lead 2507 contract opened at 16,575 yuan/mt. After a slight rise to a high of 16,650 yuan/mt, it faced downward pressure and eventually closed at 16,635 yuan/mt, up 60 yuan/mt or 0.36%.
On the macro front, on June 4 (local time), Rafael Bostic, President of the Federal Reserve Bank of Atlanta, stated that he was not in a hurry to adjust interest rates. Despite encouraging recent price data, he hoped to see "more" progress on inflation and still believed there could be one interest rate cut of 25 basis points in 2025. At the end of May, Trump announced that he would raise tariffs on all imported steel and aluminum from 25% to 50%, effective June 4. In terms of data, the US ISM manufacturing PMI released during the Dragon Boat Festival holiday fell more than expected. As the negative impact of tariff policies on the economy continues to spread, the US economy faces further downward pressure, which is positive for safe-haven assets such as precious metals.
Click to view SMM historical spot lead quotations
Spot Market Fundamentals:
In the Shanghai market, Chihong and Honglu lead were quoted at parity against the SHFE lead 2506/2507 contracts. The center of SHFE lead operations moved further downward compared to before the holiday. Suppliers adjusted their quotations accordingly. Mainstream primary lead smelters offered cargoes self-picked up from production sites at premiums of -50 yuan/mt to +100 yuan/mt against the SMM 1# lead average price. Secondary lead smelters were reluctant to sell at low prices, resulting in limited market quotations. Spot order quotations were offered at premiums of 0-100 yuan/mt against the SMM 1# lead price, while a few traders offered quotations at discounts of 50-0 yuan/mt. After the holiday, downstream enterprises gradually resumed market activities, with some making just-in-time procurement based on demand, but many remained on the sidelines. Spot order transactions in some regions improved slightly compared to before the holiday.
In terms of inventory, according to SMM, as of June 3, the total social inventory of lead ingots across five locations reached 49,900 mt, an increase of 6,500 mt from May 26 and over 400 mt from May 29. As of June 3, LME lead inventory decreased by 1,000 mt to 283,150 mt, with the decline coming from Singapore warehouses.
Today's Lead Price Forecast:
Following the Dragon Boat Festival holiday, lead prices continued to fluctuate in the doldrums, testing bottom support. Suppliers were mostly eager to sell, while some downstream enterprises made just-in-time procurement after resuming production. Transaction volumes improved slightly in regions such as Hunan and Guangdong. Downstream operations have not fully resumed, and there is still significant wait-and-see sentiment in the post-holiday lead market. Some delivery brand cargoes continue to be transferred to social warehouses. In addition, during the recent decline in lead prices, the price of scrap batteries has fallen slowly. The loss per ton of secondary lead has exceeded RMB 1,000. Smelters have shown low enthusiasm for production or have refused to budge on prices and are reluctant to sell. The quotes for some secondary refined lead have inverted against primary lead. The cost support of secondary refined lead for lead prices has once again become prominent. The recovery of secondary refined lead production will need to be closely monitored in the future.
