Regional supply tightness of primary lead has eased, keep an eye on the impact of Anhui's secondary lead production trends on lead prices [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,962.5/mt. During the Asian session, it fluctuated rangebound, with a low of $1,958/mt. Entering the European session, LME lead fluctuated downward and then rebounded, touching a high of $1,979.5/mt in the tail end of the session, and finally closed at $1,975.5/mt, up 0.61%.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,750 yuan/mt. After opening, it oscillated and consolidated around the intraday average line. It briefly touched a low of 16,720 yuan/mt in the early session and then rebounded slightly, touching a high of 16,775 yuan/mt in the tail end of the session, and finally closed at 16,755 yuan/mt, up 0.24%.

Macro Aspects:

Trump: Tariffs on drugs and chips will be announced in the coming week, with drug tariffs reaching up to 250%. India tariffs will be significantly increased within the next 24 hours. If the EU does not fulfill its investment obligations to the US, a 35% tariff will be imposed. ② The US trade balance in June recorded a deficit of -$60.2 billion, the smallest deficit since September 2023. The US non-manufacturing PMI in July slipped to 50.1 from 50.8 in June, below the expected 51.5. The ISM new orders index in July fell to 50.3 from 51.3 in June, with export orders contracting for the fourth time in five months.

The China Securities Regulatory Commission is stepping up efforts to constrain third parties involved in capital market fraud. The People's Bank of China and six other departments: Guide banks to provide medium and long-term financing for key manufacturing industry chain technologies and products such as integrated circuits and industrial mother machines.

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SHFE lead weakened again, with suppliers adjusting their quotes according to market conditions. Some suppliers expanded their discounts, while the discounts for cargoes self-picked up from electrolytic lead smelters narrowed. Mainstream producing areas quoted at discounts of 30 yuan/mt to premiums of 30 yuan/mt against the SMM #1 lead average price ex-factory, or at discounts of 100-30 yuan/mt against the SHFE lead 2509 contract. For secondary lead, secondary lead enterprises had differing views on shipments, with some refusing to budge on prices or quoting high premiums, while others shipped according to market conditions. Secondary refined lead was quoted at premiums of 0-50 yuan/mt against the SMM #1 lead average price ex-factory. Downstream enterprises had a strong wait-and-see sentiment, with some purchasing on demand. Spot market transactions were relatively limited, with some large discount cargoes being traded.

Inventory Aspects: On August 5, LME lead inventory decreased by 1,250 mt to 272,975 mt. As of August 4, the total social inventory of SMM lead ingots in five locations reached 71,900 mt, a decrease of approximately 1,000 mt from July 31.

Today's Lead Price Forecast:

Production at a medium-to-large-scale smelter in Central China has gradually stabilized and slightly increased, alleviating the tight spot supply situation of primary lead in the region. The investigation and rectification of wastewater in Anhui Province have had a certain impact on secondary lead smelters. Some smelters have voluntarily suspended production for maintenance and are observing the progress of the work, while the remaining secondary lead smelters are still maintaining production and waiting for further instructions. Due to the still lackluster performance of downstream lead consumption at this stage, the production situation of secondary lead smelters in Anhui Province has been unstable for several months, with most maintaining low-output operations. Regarding the investigation and resolution of this wastewater issue, it is recommended that the market maintain a wait-and-see attitude and pay attention to short-term fluctuations in lead prices.

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 models, for reference only and not constituting decision-making advice.