Both macro and fundamental conditions remain unclear, and the short-term lead price may struggle to reverse its weakening trend [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $2,024.5/mt. During the Asian session, LME lead moved steadily, mostly consolidating around $2,020/mt. As the market entered the European session, the US dollar index strengthened, coupled with a significant single-day increase of nearly 7,000 mt in LME lead inventory. This caused the overall operating center of LME lead to move lower, with a low of $2,007/mt during the period. The nighttime trend saw some fluctuations, and LME lead eventually closed at $2,020/mt, up 0.12%, recording a four-day losing streak.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,870 yuan/mt. With expectations of supply recovery rising, bears entered the market in a concentrated manner at the start of trading, pushing SHFE lead down to 16,870 yuan/mt and breaking through all daily moving averages. However, secondary lead was still in a state of loss. During the latter half of the trading session, the tug-of-war between longs and shorts intensified, and SHFE lead partially recovered its losses, eventually closing at 16,910 yuan/mt, down 0.21%. Its open interest reached 65,827 lots, an increase of 1,293 lots from the previous trading day.

Macro Aspects:

It is reported that, based on the consensus reached during the China-US talks, both sides will continue to promote the 90-day extension of the suspended 24% portion of the US reciprocal tariff and China's retaliatory measures as scheduled. The US Federal Court of Appeals will hold oral arguments on a key lawsuit this Thursday, challenging the legality of Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, with the "reciprocal tariff" facing a "risk of cancellation." Trump has set a new deadline for Russia to reach a Russia-Ukraine agreement, reducing it from 50 days to 10 days, and warning of tariffs on Russia. India has suspended new trade concessions and is preparing to respond to high US tariffs, aiming to finalise an agreement by September or October.

In yesterday's lead spot market, SHFE lead was in a state of weakness and oscillation. Suppliers maintained discounted shipments, with cargoes in the Jiangsu, Zhejiang, Shanghai region quoted at a discount of 50-0 yuan/mt against the SHFE lead 2508 contract, or at a discount of 40-0 yuan/mt against the SHFE lead 2509 contract. Downstream enterprises showed general enthusiasm for inquiries, with some adopting a wait-and-see attitude, and spot transactions were relatively sluggish. Additionally, as primary lead and secondary lead enterprises resumed production, the supply shortage in some regions slightly improved, with more cargoes self-picked up from production site being quoted. The mainstream production areas quoted premiums narrowed to 25-100 yuan/mt above the SMM #1 lead average price for factory delivery. Secondary lead smelters shipped goods according to market conditions, with secondary refined lead quoted at premiums of 0-50 yuan/mt above the SMM #1 lead average price for factory delivery.

Inventory: As of July 29, LME lead inventory increased by 6,700 mt to 270,350 mt. The total warrant inventory of SHFE lead ingots was 60,932 mt, unchanged from the previous day.

Today's Lead Price Forecast:

Currently, China-US tariff negotiations continue to advance, and the market sentiment is characterized by a strong wait-and-see attitude. Meanwhile, the market conditions of lead fundamentals are as follows: domestic and overseas lead ingot inventories have both risen, especially with a significant increase in overseas inventories yesterday, which has put pressure on lead prices. In the domestic market, the resumption of production, new production capacity, and other initiatives by primary lead and secondary lead smelters have gradually progressed, leading to a relative increase in the circulation volume in the spot market and a narrowing of the spot transaction premium (against the SMM #1 lead average price). However, losses in the secondary lead sector have not significantly improved, with losses per ton ranging from 500 to 700 yuan. This has resulted in poor subjective willingness among smelters to resume production, potentially constraining their production capacity expansion. It is expected that lead prices will remain in a weak consolidation trend in the short term.