With macro tailwinds exhausted, SHFE lead pulls back [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at US$2,012.5/mt, diving to a low of US$1,994/mt during the Asian session. Entering the European session, it rallied, reaching a high of US$2,018/mt in the tail end, and closed at US$2,014.5/mt, down 0.02%.

Overnight, the most-traded SHFE lead 2509 contract opened at RMB16,930/mt, touched a low of RMB16,890/mt early in the session, rebounded to a high of RMB16,985/mt, and closed at RMB16,945/mt, up 0.03%.

Macro Aspects:

US Treasury Secretary Bentsen stated that August 1st is a "relatively hard deadline" for all countries. EU trade negotiations are being conducted separately from negotiations on sanctions against Russia and Ukraine. Japan's negotiations are progressing very smoothly.

PBOC: By the end of Q2 2025, the outstanding balance of RMB loans from financial institutions was RMB268.56 trillion, up 7.1% YoY; the outstanding balance of RMB real estate loans was RMB53.33 trillion, up 0.4% YoY. SAFE: Currently, the market does not have significant expectations for RMB appreciation or depreciation, and foreign exchange market transactions are rational and orderly.

With macro tailwinds exhausted,SHFE lead showed a volatile and pulling-back trend,with suppliers maintaining discounted shipments. Some large discounted cargoes were sold out yesterday, while others were quoted at market rates. Downstream enterprises only made just-in-time procurements, with relatively small buying sentiment. Additionally, electrolytic lead smelters had limited inventory, with few quotations and relatively firm prices, shipping at parity with the SMM #1 lead average price. Secondary lead smelters once again showed reluctance to sell at low prices, with secondary refined lead quotations at premiums of 0-75 yuan/mt against the SMM #1 lead price, with some in a wait-and-see stance.

Inventory: On July 22nd, LME lead inventory decreased by 2,425 mt to 262,500 mt. As of July 21st, the total social inventory of SMM lead ingots in five regions reached 71,300 mt, an increase of 7,900 mt from July 14th and an increase of 2,300 mt from July 17th.

Today's Lead Price Forecast:

After the lead price stopped falling and rebounded, the shipping enthusiasm of lead smelters has recovered somewhat, especially secondary lead smelters planning production resumptions according to demand. The spot circulation volume in some regions has increased, and downstream enterprises have more procurement options. Currently, the terminal consumption of the lead-acid battery market is weak, with battery producers' weekly operating rates remaining stable above 70%. The buying sentiment for spot orders has not changed much, and the social inventory of lead ingots is being digested slowly.

Supply side, production at some primary lead smelters in Henan has not yet resumed, and the operating rate of secondary lead has steadily increased. On the consumption side, orders for lead-acid batteries have not shown significant improvement, with battery producers' weekly operating rates remaining stable above 70%. The buying sentiment for spot orders has not changed much, and the social inventory of lead ingots is being digested slowly. After macro sentiment briefly boosted market sentiment, the current lead price is still dragged down by fundamentals.

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