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The contradiction in raw material supply and consumption expectations are intertwined. Short-term lead prices are expected to consolidate [SMM Lead Morning Meeting Summary]

iconJul 7, 2025 09:00
Source:SMM
[SMM Lead Morning Meeting Summary: Intertwined Raw Material Supply Conflicts and Consumption Expectations, Short-Term Lead Prices Expected to Consolidate] Starting from July 4, the US government will issue notifications on new tariff rates to countries that have not yet reached trade agreements. It is understood that after maintenance in July, smelters will resume production, with expectations rising for an increase in ingot output. Consequently, the demand for raw materials such as lead concentrates and scrap batteries is expected to increase simultaneously...

Futures Market:

Last Friday, LME lead opened at $2,060/mt. With the end of the US's suspension period for reciprocal tariffs, market concerns grew. After a sharp rise in the previous trading day, LME lead pulled back relatively, maintaining a consolidation trend throughout the day, oscillating mostly between $2,055-2,065/mt, until it finally closed at $2,057/mt, down 0.29%.

Last Friday, the most-traded SHFE lead 2508 contract opened at 17,315 yuan/mt. As SHFE lead ingot inventory increased as expected, coupled with rising tariff risks, SHFE lead reversed its trend and pulled back, trading between 17,230-17,250 yuan/mt, until it finally closed at 17,225 yuan/mt, down 0.26%. Its open interest reached 51,651 lots, a decrease of 21 lots from the previous trading day.

》Click to view historical SMM lead spot quotes

Macro Aspects: Starting from July 4, the US government will notify countries that have not yet reached trade agreements of new tariff rates, ranging from 10% to 70%, and plans to officially implement them from August 1. Additionally, Musk announced the establishment of the "America Party" to "avoid the bankruptcy of the US" and plans to run for election next year.

Spot Fundamentals:

In the lead spot market last Friday, SHFE lead remained strong, with suppliers shipping goods as they came. Warehouse cargoes in the Jiangsu, Zhejiang, Shanghai region were quoted at a discount, with discounts of 80-0 yuan/mt against the SHFE lead 2508 contract. Additionally, electrolytic lead smelter cargoes self-picked up from production sites were mostly quoted at parity with the SMM 1# lead average price. Secondary refined lead was quoted at a discount of 50-0 yuan/mt against the SMM 1# lead average price, with a few discounts exceeding 100 yuan/mt. Downstream enterprises mainly made just-in-time procurements, with long-term contracts accounting for the majority. Spot order transactions in the Jiangsu, Zhejiang, Shanghai region remained limited.

Inventory: As of July 4, LME lead inventory decreased by 2,625 mt to 263,275 mt. The total weekly inventory of SHFE lead ingots reached 53,303 mt, an increase of 1,374 mt from the previous week.

》Click to view SMM metal industry chain database

Today's Lead Price Forecast:

It is understood that after maintenance, smelters are expected to resume production in July, with an anticipated increase in ingot output. This will simultaneously increase the demand for raw materials such as lead concentrates and scrap batteries. High demand will further push up raw material costs, supporting lead prices to hold up well. However, we need to note that the current lead-acid battery market has not truly entered the peak season. High lead prices constrain downstream procurement enthusiasm. Additionally, with the spread between futures and spot prices expanding to over 200 yuan/mt, the possibility of unreported inventory turning into reported inventory before the next round of lead futures delivery will still affect the pace of lead price increases.

Market review

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