Lead prices are in the doldrums, with downstream players cautiously observing and hesitating to purchase due to fear of price drops [SMM Lead Morning Meeting Summary]

Futures Market:

On Friday evening, LME lead opened at $2,038/mt, experiencing a slight decline during the Asian session. Entering the European session, it remained weak under pressure from the intraday average line, reaching a low of $2,016/mt before the close, with a drop of $20/mt or 0.98%.

On Friday evening, the most-traded SHFE lead contract settled at 17,055 yuan/mt. After opening, it consolidated around the intraday average line, touching a high of 17,130 yuan/mt before pulling back slightly before the close, ultimately closing at 17,070 yuan/mt, with a drop of 35 yuan/mt or 0.2%.

Macro: The Israeli military claimed to have raided a military stronghold in southern Syria, seizing 3 tons of weapons; the EU postponed the implementation of retaliatory tariffs against the US. European Commission President Ursula von der Leyen stated on July 13 in Brussels during a joint press conference with visiting Indonesian President Prabowo that the EU would fully utilize the negotiation window from now until August 1 to reach a trade agreement with the US and would further extend the suspension period of retaliatory tariffs against the US until early August.

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Spot Fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at discounts of 40-0 yuan/mt against the SHFE lead 2508 contract; in the Jiangsu-Zhejiang market, Jijin and JCC lead were quoted at discounts of 20-10 yuan/mt against the SHFE lead 2508 contract. SHFE lead reversed its trend and pulled back, with some suppliers narrowing their discount quotes, while downstream enterprises showed general enthusiasm for purchasing warehouse cargoes, with limited inquiries. Additionally, there were still differences in the sales strategies of primary lead smelters, with some expanding discounts for sales and others maintaining firm quotes. The mainstream spot order quotes in the main producing areas were at discounts of 50 yuan/mt to premiums of 100 yuan/mt against the SMM 1# lead average price for factory delivery. Secondary lead smelters were reluctant to sell at low prices, with some refusing to budge on prices. The secondary refined lead quotes were at discounts of 100-0 yuan/mt to premiums of 50-75 yuan/mt against the SMM 1# lead average price for factory delivery. Downstream enterprises purchased on demand and at lower prices, preferring to purchase from primary lead smelters' factory delivery sources or diverting to secondary lead, while warehouse cargo transactions remained sluggish.

Inventory: As of July 11, LME lead inventory decreased by 3,000 mt to 249,375 mt; as of July 10, the total social inventory of SMM lead ingots in five regions reached 61,100 mt, an increase of 4,200 mt from July 3 and an increase of 3,200 mt from July 7.

Today's Lead Price Forecast:

The expectation for the peak consumption season of lead has not yet materialized, with downstream enterprises' demand being scattered and their rigid demand more inclined towards purchasing from smelters' factory delivery sources. Additionally, some downstream enterprises are cautious about high prices and have a strong wait-and-see sentiment, leading to reduced purchases. In terms of supply, the supply of primary and secondary lead in July is slowly increasing. As the SHFE lead 2507 contract approaches delivery, the expansion of the spread between futures and spot prices, combined with a decline in downstream purchasing enthusiasm, has led suppliers to transfer inventory for delivery, driving an increase in social inventory of lead ingots. The revelation of unreported inventory may further drag down lead prices. However, at the same time, the supply contradiction in the raw material sector remains unresolved, with the supply of domestic lead concentrates and scrap batteries still being a prominent issue. The cost support at the bottom of the lead price range is relatively strong.

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