Lead prices fluctuate upward, and downstream enterprises are cautious in procurement [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $1,976.5/mt. During the Asian session, it briefly touched a low of $1,975.5/mt before fluctuating upward. Driven by the expectations of an interest rate cut boosted by the remarks of Fed officials, the US dollar index declined. Entering the European session, LME lead reached a high of $2,002.5/mt and finally closed at $1,997/mt, up 1.09%.

Overnight, the most-traded SHFE lead 2509 contract opened at 16,880 yuan/mt. Early in the session, it briefly touched a high of 16,905 yuan/mt before fluctuating downward, reaching a low of 16,825 yuan/mt, and finally closing at 16,860 yuan/mt, up 0.18%.

Macro:

US Fed: ① Kashkari: An interest rate cut may be appropriate in the short term, and two rate cuts this year are reasonable. ② Trump: The new Fed governor may be temporary, and the appointment will be announced in 2-3 days. Trump said he would impose approximately 100% tariffs on chips and semiconductors, with exemptions for factories built in the US. He met with Huang Renxun before announcing the tariffs. Trump announced a 25% tariff increase on Indian goods, bringing the total tariff rate to 50%. White House officials said Apple would be largely unaffected by the US tariffs on India, and Apple increased its US investment commitment by $100 billion.

Indian media: Modi will visit China from August 31 to September 1 to attend the SCO Tianjin Summit. The General Office of the Shanghai Municipal People's Government issued the Implementation Plan for the Development of Shanghai's Embodied Intelligence Industry. Li Auto, China Automotive Engineering Research Institute, and Dongfeng Liuzhou Motor issued a joint statement, advocating for strict adherence to self-discipline and the cultivation of a healthy competitive environment. The State Grid Corporation of China's power load has hit a record high for three consecutive days.

:

As news about the environmental protection impact on the largest production area of secondary lead spread, SHFE lead surged strongly, briefly breaking through 16,900 yuan/mt. Suppliers were mostly active in selling, but due to the sell-out of some heavily discounted cargoes the day before, the discounts for cargoes in circulation yesterday narrowed slightly. Meanwhile, the quotes for cargoes self-picked up from primary lead smelters remained firm, with mainstream production areas generally quoting on par with the SMM #1 lead price or at a discount of 120-80 yuan/mt against the most-traded SHFE lead 2509 contract. For secondary lead, due to the simultaneous progress of environmental protection impacts and production resumptions, the regional supply differences in the secondary lead market widened. Secondary refined lead was quoted at 15,600-15,800 yuan/mt (excluding tax), and the tax-included price was quoted at a premium of 0-75 yuan/mt against the SMM #1 lead average price ex-factory. The risk-aversion sentiment of downstream enterprises eased, and their inquiry enthusiasm increased. However, due to the significant increase in lead prices, downstream enterprises were relatively cautious in procurement, and market transactions improved only slightly.

Inventory: On August 6, LME lead inventory decreased by 4,375 mt to 268,600 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:

Supply side, observe the production dynamics of primary lead smelters in Central China. Additionally, the sewage inspection work in Anhui Province is still ongoing, and attention should still be paid to the impact on local secondary lead production. On the demand side, the tariff incident has escalated, leading to a decrease in the number of new battery export orders in August. Domestic battery producers have many high-temperature holidays, and it is expected that there will be limited room for production increase in August. Meanwhile, attention should be paid to the driving force of domestic e-bike consumption changes on lead-acid battery demand. Overall, lead prices have fluctuated upward recently, but there is significant upward pressure.

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