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Tight supply of raw materials and rising costs may lead to continued fluctuation of lead prices at highs in the short term [SMM Lead Morning Meeting Summary]

iconJul 10, 2025 09:00
Source:SMM
[SMM Lead Morning Meeting Summary: Tight Raw Material Supply and Rising Costs, Lead Prices May Continue to Fluctuate at Highs in the Short Term] The latest minutes of the June meeting released by the US Fed showed that officials' differences over the interest rate outlook were becoming increasingly apparent, mainly due to their differing expectations on how tariffs might affect inflation. In July, the lead market is expected to see an increase in both supply and demand, but the growth rates of both are relatively slow...

Futures Market:

Overnight, LME lead opened at $2,043.5/mt. With US tariff risks lingering, LME lead fluctuated downward during the Asian session, hovering around $2,035/mt until the European session. Later, as the US Fed released its latest meeting minutes, the US dollar index jumped initially and then pulled back, prompting LME lead to rebound from losses and finally close at $2,058.5/mt, up 0.71%.

Overnight, the most-traded SHFE lead 2508 contract opened at 17,180 yuan/mt. Initially dragged down by LME lead's decline, SHFE lead consolidated briefly near 17,150 yuan/mt before gradually fluctuating upward to regain its daytime level above 17,200 yuan/mt, ultimately closing at 17,225 yuan/mt, up 0.15%. Its open interest fell by 344 lots to 51,917 lots compared with the previous trading day.

》Click to View SMM Lead Spot Historical Quotes

Macro Overview: China's June CPI rose 0.1% YoY, with core CPI growth hitting a 14-month high, while the PPI YoY decline widened to 3.6%. The US's second wave of Trump tariff letters targeted eight countries, imposing a 50% tariff on Brazil—the highest so far—exceeding the previous reciprocal tariff of 10%. Starting August 1, the US will levy tariffs of 20% on Philippine products, 25% on Brunei and Moldova, and 30% on Algeria, Iraq, Libya, and Sri Lanka. The US Fed's latest June meeting minutes revealed growing divergence among officials on the interest rate outlook, primarily due to differing expectations on how tariffs might impact inflation. Most officials believed tariffs could persistently push inflation higher, while a minority were open to considering an interest rate cut at the next meeting.

Spot Fundamentals:

In yesterday's lead spot market, SHFE lead rebounded from losses, prompting suppliers to actively widen discounts for sales. Warehouse cargo quotations in Jiangsu, Zhejiang, and Shanghai were at discounts of 60-20 yuan/mt against the SHFE lead 2508 contract, while downstream enterprises' inquiries decreased compared to the previous day, with no improvement in market transactions in these regions. Meanwhile, primary lead smelters' self-picked-up cargo quotations saw widening disparities. In the South China market, smelters quoted flexibly, with discounts of 30-0 yuan/mt against the SMM 1# lead average price. In the North China market, due to smelter supply issues, cargo pick-up queues emerged, and quotations remained relatively firm. Additionally, after the lead price rise, secondary lead producers showed slightly better sales sentiment. However, due to regional supply differences, secondary refined lead quotations ranged from discounts of 50 yuan/mt to premiums of 50 yuan/mt against the SMM 1# lead average price, with actual transactions still leaning toward discounts.

Inventory Update: As of July 9, LME lead inventories fell by 2,975 mt to 255,100 mt, while SHFE lead warrant inventories rose by 2,895 mt to 50,608 mt from the previous day.

》Click to view the SMM Metal Industry Chain Database

Today's lead price forecast:

In July, the lead market is expected to see an increase in both supply and demand. However, the growth rates of both are relatively slow, with supply slightly exceeding consumption. As a result, lead ingot inventory will gradually accumulate, limiting the upside potential of lead prices. Next week, the SHFE lead 2507 contract will approach delivery, and the delivery brand of lead ingots may be transferred to delivery warehouses, turning unreported inventory into reported inventory. Additionally, the ongoing escalation of US tariff issues, including their impact on imported lead ore and lead-acid battery exports, has shown signs of a renewed decline in TCs for imported ore. In the short term, raw material cost factors will still support lead prices fluctuating at highs.

Market review

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