Weak consumption performance, lead prices fall below 17,000 yuan per ton [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $2,008.5/mt. During the Asian session, it fluctuated downward, reaching a low of $1,985/mt in the European session. It then slightly rebounded and consolidated near the intraday average line, eventually closing at $2,001/mt, down by $4/mt or 0.2%. Bulls continued to reduce their positions and exit the market, with LME lead recording a four-day losing streak.

Overnight, the most-traded SHFE lead contract opened at 16,930 yuan/mt. After consolidating near the intraday average line in the early session, it dropped to a low of 16,875 yuan/mt. It then fluctuated upward throughout the session, reaching a high of 16,945 yuan/mt. After slight consolidation, it eventually closed at 16,935 yuan/mt, down by 75 yuan/mt or 0.44%.

Macro Perspective: On July 15 local time, Trump announced that tariffs would be imposed starting August 1. He also stated that the agreement with Vietnam was basically finalized. German Chancellor Merz said on the 15th that the US government should not underestimate the EU's willingness to take similar retaliatory measures on the tariff issue. The US consumer price index rose by 2.7% YoY in June, higher than market expectations and marking the largest YoY increase since February. Analysts believe that the US government's move to raise or threaten to raise tariffs on products imported from major trading partners this year is the main reason for the price increase.

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Spot Market Fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at a discount of 60-0 yuan/mt against the SHFE lead 2508 contract. In the Jiangsu, Zhejiang, and Shanghai markets, Jijin and JCC lead were quoted at a discount of 20-10 yuan/mt against the SHFE lead 2508 contract. With the delivery of the SHFE lead 2507 contract, suppliers adjusted their quotes according to market conditions. Some prioritized delivery, while others maintained discounted quotes for spot orders. However, downstream buyers had a strong wait-and-see sentiment, resulting in sluggish transactions in the Jiangsu, Zhejiang, and Shanghai markets. Meanwhile, the supply of cargoes self-picked up from production sites of primary lead smelters showed significant regional differences. Supply was tight in northern regions, with some smelters continuing to have queues for cargo pick-up. In contrast, the supply in the southern market was relatively loose, with some areas again seeing discounted quotes (against the SMM 1# lead average price), making it difficult for suppliers to sell their goods.

Inventory: As of July 15, LME lead inventory increased by 10,125 mt to 271,075 mt. As of July 14, the total social inventory of SMM lead ingots in five regions reached 63,400 mt, an increase of 5,600 mt from July 7 and an increase of 2,400 mt from July 10.

Lead Price Forecast for Today:

In terms of supply, there is only a slight expectation of recovery in secondary refined lead production in July. Regular maintenance of primary lead production in Yunnan, Inner Mongolia, and other regions has not yet concluded, and the raw material supply conflict provides strong bottom support for lead prices. Delivery brand enterprises have limited cargoes available for transfer to delivery warehouses. After the completion of transfer to delivery warehouses, the expected continuous increase in domestic social inventory is expected to slow down. Lead prices have stopped falling and stabilized in the short term, but subsequent rebounds still require support from the actual performance of downstream production and end-use consumption. Lead prices may still continue to fluctuate and consolidate.

Data source statement: Except for publicly available information, all other data are based on publicly available information, market exchanges, and rely on SMM's internal database models, processed by SMM, and are for reference only, not constituting decision-making advice.

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