Downstream enterprises maintain just-in-time procurement, and there is still an expectation of an increase in social inventory of lead ingots [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at US$2,040/mt. After touching a low of US$2,036/mt in the Asian session, it fluctuated upward. Entering the European session, it reached a high of US$2,053.5/mt before pulling back slightly at the end of the session, closing at US$2,041.5/mt with a 0% change.

Overnight, the most-traded SHFE lead 2508 contract opened at RMB 17,200/mt. After touching a high of RMB 17,220/mt in the early session, it plunged to a low of RMB 17,140/mt before rebounding slightly at the end of the session, closing at RMB 17,170/mt with a 0.15% increase.

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Macro Aspects:

US Fed's Bostic: I still expect one interest rate cut this year. I anticipate three interest rate cuts next year, and there is no need to raise interest rates to combat inflation. Goldman Sachs has moved up its forecast for a US Fed interest rate cut to September. The Chicago Business Activity Index in the US fell to 40.4 in June from 40.5 in May, below the expected 43.0 and the lowest level since January, indicating that economic activity has contracted for 19 consecutive months. The Dallas Fed's Business Activity Index contracted for the fifth consecutive month. Musk: If the "Big and Beautiful" bill passes, a new political party will be established in the US the next day.

China's National Bureau of Statistics (NBS): In June, the manufacturing PMI was 49.7%, up 0.2 percentage points from the previous month. China's Ministry of Finance: Foreign investors who directly invest their distributed profits in qualified projects can claim a tax credit equivalent to 10% of their investment amount.

Spot Market Fundamentals:

In the Shanghai market, Chihong and Honglu lead were priced at RMB 17,090-17,135/mt. In the Jiangsu-Zhejiang market, Jijin and JCC lead were priced at RMB 17,090-17,125/mt. SHFE lead prices fluctuated downward, with suppliers' quoted premiums changing relatively little compared to last Friday. Downstream enterprises maintained just-in-time procurement, with a few expressing interest in receiving some heavily discounted cargoes. Secondary lead smelters sold their products at market prices, with secondary refined lead quoted at discounts of RMB 100-0/mt against the SMM 1# lead average price ex-works, a narrower price spread advantage compared to last Friday. Spot market transactions were sluggish.

Inventory: On June 30, LME lead inventory decreased by 1,500 mt to 271,925 mt. As of June 30, the total social inventory of SMM lead ingots in five regions reached 56,300 mt, an increase of over 600 mt from June 23 and over 300 mt from June 26.

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Today's Lead Price Forecast:

Currently, downstream enterprises are maintaining purchasing as needed. Given that the delivery time is still far away, although there is an expectation for an increase in social inventory of lead ingots, before widespread production resumptions by secondary lead enterprises, it is expected that there will be no significant inventory buildup in the short term, and the drag on lead prices will be limited. In the future, we need to pay attention to the production trends of lead smelters and the strength of support for lead prices from raw material costs.