SHFE Allows Foreign Participation in Lead Futures, May Boost Lead Prices to Hold Up Well in Short Term [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at US$1,983/mt. With prominent overseas geopolitical conflicts and the US Fed's June interest rate decision meeting expectations by remaining unchanged, LME lead fluctuated downward throughout the day after opening, hitting a low of US$1,971/mt, the lowest in nearly half a month. Until the late night session, LME lead stopped falling and rebounded, almost recovering the daytime losses. It finally closed at US$1,989.5/mt, up 0.68%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,850 yuan/mt. Boosted by the news that the SHFE would allow more investors to participate in lead futures, SHFE lead fluctuated upward. However, with limited fundamental support, SHFE lead failed to regain the 16,900 yuan/mt level and finally closed at 16,845 yuan/mt, up 0.06%. Its open interest stood at 38,409 lots, decreasing by 1,645 lots from the previous trading day.

》Click to view historical SMM lead spot quotes

Macro Aspects: Pan Gongsheng, Governor of the People's Bank of China, made significant statements regarding the transformation of the monetary policy framework, mentioning stablecoins for the first time and announcing eight major financial policies, including establishing a transaction reporting repository for the interbank market, an international operation center for the digital yuan, and personal credit reporting agencies. Li Yunze, Chairman of the National Financial Regulatory Administration, stated support for foreign institutions to participate in more financial business pilot programs and explore greater financial openness. The US Fed continued to hold steady, stating that uncertainties have decreased but remain high, still expecting two interest rate cuts this year, and hinting at increased risks of stagflation. Powell anticipated that inflationary pressures would rise significantly in the coming months due to tariffs, and that the job market was not calling for interest rate cuts.

Additionally, on June 18, the Shanghai Futures Exchange further expanded the range of tradable varieties for qualified foreign institutional investors and RMB qualified foreign institutional investors, adding natural rubber, lead, and tin futures and options contracts.

Spot Fundamentals:

In yesterday's lead spot market, SHFE lead fluctuated and pulled back, with suppliers maintaining discounted quotes. In the Jiangsu, Zhejiang, Shanghai region, quotes were at discounts of 50-0 yuan/mt against the SHFE lead 2507 contract. Among them, quotes for cargoes self-picked up from primary lead smelters were at discounts of 30 yuan/mt to premiums of 50 yuan/mt against the SMM 1# lead average price. Secondary lead enterprises were reluctant to sell at low prices, with few quotes. Secondary refined lead quotes were at discounts of 75-0 yuan/mt against the SMM 1# lead average price, with some at premiums of 25-75 yuan/mt. With lead prices pulling back, downstream enterprises had strong wait-and-see sentiment, and their inquiry enthusiasm weakened compared to yesterday. Only some made just-in-time procurement, and spot market transactions turned sluggish.

Inventory: As of June 18, LME lead inventory increased by 2,025 mt to 289,475 mt. SHFE lead warrant inventory stood at 44,387 mt, decreasing by 1,116 mt from the previous day.

》Click to view the SMM Metal Industry Chain Database

Today's Lead Price Forecast:

Recently, the global lead supply has gradually shown a surplus trend, with overseas inventories once again approaching the 290,000 mt mark. Although the domestic fundamentals have improved somewhat due to production cuts and suspensions on the supply side, the impact of the traditional consumption off-season has not significantly improved, becoming the main factor dragging down lead prices. Yesterday, the SHFE allowed overseas investors to participate in lead futures and options trading, which may increase the trading activity in the lead market to a certain extent and provide a short-term boost to lead prices. However, the ultimate trading logic still needs to focus on the trend of fundamental changes.