Domestic supply and demand remain sluggish, with a stalemate; short-term lead prices may maintain high-level consolidation [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at US$1,989.5/mt. During the Asian session, LME lead consolidated at highs but failed to break through the US$2,000/mt integer level. Entering the European session, overseas geopolitical conflicts persisted, intensifying market concerns about the economic outlook. Coupled with rising lead inventory, the center of LME lead's operation shifted downward, eventually closing at US$1,988.5/mt, down 0.05%.

Overnight, the most-traded SHFE lead 2507 contract opened at 16,920 yuan/mt. The positive news of the SHFE allowing overseas investors to participate in lead futures remained, coupled with a decline in lead warrant inventory. SHFE lead maintained a state of high-level fluctuations, oscillating mostly between 16,880-16,920 yuan/mt, and eventually closed at 16,910 yuan/mt, up 0.18%. Its open interest reached 33,573 lots, a decrease of 334 lots from the previous trading day.

》Click to view historical SMM lead spot quotes

Macro Aspects: Chinese and Russian leaders held a phone call, focusing on exchanging views on the situation in the Middle East. US President Trump reportedly believes it is necessary to disable Iran's Fordow nuclear facility, and the White House said it would decide within two weeks whether to attack Iran. Trump has demanded for two consecutive days that the US Fed cut interest rates by 2.5 percentage points and has also criticized Powell, calling him "stupid," "one of the most destructive people," and "a disgrace to the US." Trump frequently points out that "Mr. Too Late" Powell's failure to cut interest rates has cost the US "hundreds of billions of dollars."

Spot Fundamentals:

In yesterday's lead spot market, driven by the positive news of the SHFE allowing overseas traders to participate, lead prices surged strongly in the morning, approaching the 17,000 yuan/mt level. Suppliers actively quoted and sold, with more quotes than the previous day. In the Jiangsu, Zhejiang, Shanghai region, quotes were at discounts of 50-0 yuan/mt against the SHFE lead 2507 contract. Primary lead smelters mostly refused to budge on prices, with quotes in major producing areas ranging from discounts of 30 yuan/mt to premiums of 100 yuan/mt against the SMM 1# lead average price. Secondary lead enterprises quoted in line with the market, with secondary refined lead quotes ranging from discounts of 75 yuan/mt to premiums of 25 yuan/mt against the SMM 1# lead average price ex-factory. Downstream enterprises showed a strong wait-and-see sentiment, with declining acceptance of high-priced lead. There were a small number of rigid demand transactions in the main consumption areas around Jiangsu, Zhejiang, and Shanghai.

Inventory: As of June 19, LME lead inventory decreased by 2,025 mt to 287,425 mt. The total social inventory of lead ingots in five regions tracked by SMM reached 56,000 mt, an increase of 1,300 mt from June 12 and a decrease of over 300 mt from June 16.

》Click to view the SMM Metal Industry Chain Database

Today's Lead Price Forecast:

Recently, most domestic secondary lead enterprises have been in a state of production reduction or suspension, coupled with an increase in maintenance at primary lead enterprises, leading to a relatively tight supply of lead ingots. Lead prices have also shown a fluctuating upward trend, with the price increase stimulating some downstream enterprises to purchase on demand. The off-season trend in the lead-acid battery market remains unchanged, with most downstream enterprises making just-in-time procurement. Especially when the lead price approaches the threshold of 17,000 yuan, downstream enterprises are more cautious about purchasing high-priced goods. Next week will be late June, and the impact of maintenance at primary lead smelters will increase. Meanwhile, as it is mid-year, some downstream enterprises also need to close accounts and settle payments, which may temporarily suspend their procurement of lead ingots. Under the situation of weak supply and demand, it is expected that lead prices will remain in a high consolidation pattern.