Lead prices are in the doldrums. Lead ingot supply is tightening locally, and smelters are reluctant to sell and are waiting to see [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,975.5/mt. During the Asian session, it rose slightly. Entering the European session, it first declined and then rebounded, touching a low of $1,967/mt. After operating in the doldrums under pressure from the intraday moving average, it rallied to close at $1,978/mt, down $0.5/mt or 0.03%.

Overnight, the most-traded SHFE lead contract opened at 16,825 yuan/mt. In the early session, it rose slightly to touch a high of 16,845 yuan/mt. After that, it fluctuated rangebound around the intraday moving average, eventually closing at 16,825 yuan/mt, down 45 yuan/mt or 0.27%, and recording a doji.

On the macro front, the Jordanian Ministry of Foreign Affairs issued a statement on the 17th, saying that 11 Middle Eastern countries, including Jordan and the UAE, issued a joint statement on the same day, supporting Syria's security, unity, stability, and sovereignty, and opposing foreign interference in Syria's affairs. The US House of Representatives passed a cryptocurrency bill; the Russian Foreign Ministry spokesperson said that Russia is willing to conduct a third round of negotiations with Ukraine. The Accounting Department of the Ministry of Finance of China issued Q&As based on Article 8 and its application guidelines of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments (hereinafter referred to as Standard 22), providing a clearer accounting treatment path for profit-taking from short-term price fluctuations without involving physical cargo pick-up.

Spot Fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at premiums of -50 to 0 yuan/mt against the SHFE lead 2508 contract. In the Jiangsu, Zhejiang, and Shanghai markets, Yuguang, Jijin, and JCC lead were quoted at premiums of -20 to -10 yuan/mt against the SHFE lead 2508 contract. SHFE lead was in a weak consolidation phase, and suppliers shipped goods according to market conditions. Due to the re-entry of goods into the market after delivery, there were more quotes in the Jiangsu, Zhejiang, and Shanghai markets than yesterday. However, downstream enterprises had significant differences in purchasing, with some being cautious due to fear of price declines and others intending to buy the dip, resulting in a slightly better trading atmosphere. Additionally, primary lead smelters had a strong reluctance to sell at low prices, with some refusing to budge on prices. The quotes in the main producing areas were mostly on par with the SMM #1 lead average price for factory delivery. Secondary lead smelters also had fewer shipments, with secondary refined lead quoted at premiums of -50 to +100 yuan/mt against the SMM #1 lead price for factory delivery.

Inventory: As of July 17, LME lead inventory increased by 1,725 mt to 270,950 mt, with the increase mainly coming from Singapore warehouses. The total social inventory of SMM lead ingots in five regions reached 69,000 mt, an increase of 7,900 mt from July 10 and 5,600 mt from July 14.

Lead Price Forecast for Today:

Recently, lead prices have been in a weak consolidation phase. The shipping enthusiasm of primary lead and secondary lead smelters has declined. Coupled with maintenance and production cuts at smelters in Henan province, this has led to a tightening of regional lead ingot supply, resulting in queues for cargo pick-up. At the beginning of the week, the transfer of lead ingot inventory due to transfer to delivery warehouse led to a continued increase in social inventory of lead ingots in social warehouses. As the weekend approached, the spread between futures and spot prices narrowed, prompting suppliers to halt their inventory transfer actions. As a result, the growth in social inventory of lead ingots slowed down. Multiple smelters in Hunan and Henan provinces experienced a sell-out of inventory and adopted a wait-and-see attitude. There is no expected short-term recovery in the supply of lead ingots in the Henan region. Downstream rigid demand may shift to consuming inventory from social warehouses. The short-term reduction in supply may provide support for lead prices.