As the delivery date approaches this week, spot discounts for lead ingots may narrow [SMM Morning Lead Meeting Summary]

Futures Market:

Last Friday, LME lead opened at $1,982/mt. During the Asian session, it fluctuated upward. Entering the European session, it rose to a high of $1,993/mt before fluctuating downward. It hit a low of $1,973.5/mt in the tail end of the session and closed at $1,974/mt, down 0.35%.

On Friday evening, the most-traded SHFE lead 2507 contract opened lower with a gap at 16,705 yuan/mt. It briefly touched a high of 16,765 yuan/mt in the early session. Due to an increase in bears' positions, it fluctuated downward and hit a low of 16,695 yuan/mt. In the tail end of the session, it fluctuated rangebound and closed at 16,710 yuan/mt, up 0.15%.

》Click to view historical SMM lead spot quotes

Macro Aspects:

The US added slightly more non-farm payrolls than expected in May, with significant downward revisions to the data for the previous two months. The unemployment rate remained stable, and average hourly earnings were better than expected. Bets on a US Fed interest rate cut decreased. Trump commented on the non-farm payrolls data: "The employment data is impressive, and the stock market soared!" He once again called for Powell to cut interest rates by 100 basis points. In an interview, he said that the appointment of the new Fed Chairman would be announced soon.

The Shanghai Stock Exchange in China stated that it would encourage publicly listed firms to further increase dividend payouts and frequency. The PBOC increased its gold reserves for the seventh consecutive month, with gold reserves rising to 73.83 million ounces by the end of May.

Spot Fundamentals:

SHFE lead maintained a consolidation trend. Suppliers quoted prices in line with the market, with most offering small discounts. In major regions, the discounts for cargoes self-picked up from primary lead smelters narrowed slightly, with quotes ranging from a discount of 40 yuan/mt to a premium of 100 yuan/mt against the SMM 1# lead average price ex-factory, mainly due to narrower discounts in South China. For secondary lead, production cuts increased due to environmental protection and losses, with smelters shipping less. Some traders continued to ship as usual, with mainstream prices ranging from a premium of 0-100 yuan/mt against the SMM 1# lead average price ex-factory. Downstream enterprises maintained just-in-time procurement, with some accepting cargoes with large discounts. Spot market transactions improved regionally.

Inventory: On June 6, LME lead inventory decreased by 1,375 mt to 281,275 mt. As of June 5, the total social inventory of lead ingots in five regions tracked by SMM reached 53,900 mt, an increase of 4,500 mt from May 29 and an increase of 4,000 mt from June 3.

》Click to view the SMM Metal Industry Chain Database

Today's Lead Price Forecast:

Driven by both the transfer of lead ingots to delivery warehouses and downstream purchases, the in-plant inventory of primary lead smelters has decreased. As this week approaches the delivery date, it is expected that suppliers will increase the transfer of inventory to delivery warehouses. After the transfer, the available spot cargoes in the market are expected to decrease relatively, and spot discounts are anticipated to narrow. For secondary lead, losses remain the primary issue. Production cuts at secondary lead smelters have increased, and the supply gap for scrap batteries may slightly narrow. Transactions involving secondary refined lead at a premium are expected to decrease. On the demand side, after lead prices hit a low and rebounded, downstream enterprises have successively purchased the dip on demand. However, against the backdrop of the off-season, the rigid demand of battery enterprises is limited. If lead prices continue to rebound, the enthusiasm of downstream enterprises for purchasing may weaken.