The short-term peak season consumption expectations have not yet been realized, and lead prices continue to be in the doldrums [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,999/mt. During the Asian session, it remained under pressure and traded in the doldrums near the daily average. Entering the European session, it continued to decline, reaching a low of $1,974.5/mt, before finally closing at $1,978/mt, down $23/mt or 1.15%. Bulls continued to reduce their positions and exit the market, with LME lead recording five consecutive days of losses.

Overnight, the most-traded SHFE lead contract opened at 16,900 yuan/mt. After a slight initial rise to 16,935 yuan/mt, it corrected back to the daily average, fluctuating rangebound. Before the close, it weakened slightly, finally closing at 16,885 yuan/mt, down 10 yuan/mt or 0.06%.

On the macro front, the European Commission unveiled a long-term budget plan of approximately 2 trillion euros on the 16th, focusing on increased investment in priorities such as defense and competitiveness. On the same day (local time), US President Trump, when discussing Fed Chairman Powell, stated that he currently had no plans to take any action and had not drafted a dismissal letter.

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Spot Fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at discounts of 50-0 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. The center of SHFE lead's price movement shifted further downward, with some suppliers narrowing their discount quotes. However, downstream enterprises exhibited a strong wait-and-see sentiment, with limited inquiries and sluggish spot order market transactions. Additionally, there were still differences in primary lead smelter supply between the north and south, with quoted premiums and discounts expanding simultaneously. In the north, premium quotes gradually emerged (against the SMM #1 lead average price), while discounts expanded in the south. Furthermore, the reluctance to sell at low prices among secondary lead smelters increased, with some halting quotes. Other enterprises' quotes tended towards premiums, with secondary refined lead quoted at discounts of 50 yuan/mt to premiums of 50 yuan/mt against the SMM #1 lead average price ex-factory.

Inventory: As of July 16th, LME lead inventory decreased by 1,850 mt to 269,225 mt, with destocking in Singapore warehouses offsetting inventory accumulation in Kaohsiung warehouses. As of July 14th, the total social inventory of SMM lead ingots across five locations reached 63,400 mt, an increase of 5,600 mt from July 7th and 2,400 mt from July 10th.

Today's Lead Price Forecast:

In terms of supply during the peak season, after the continuous weakening of lead prices, the absolute prices of scrap batteries and lead concentrates have followed suit, slightly lowering the cost support below lead prices. Terminal consumption has not yet materialized. Before the implementation of August tariffs, battery orders exported to the US from various regions may be affected and decline. Domestic battery enterprises are cautious due to the fear of further price drops, preferring smelter sources for spot purchases. After the July delivery, there is still a slight increase in domestic lead ingot social inventory. After the short-term decline in lead prices, except for a few smelters that refused to budge on prices and held back sales or made pre-sales due to reasons such as a decline in supply, the subsequent rebound still requires support from the actual performance of downstream operations and end-use consumption. Lead prices may still continue to fluctuate and consolidate.

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