Secondary refined lead producers refuse to budge on prices and cherish the selling price. Lead prices continue to fluctuate and consolidate [SMM Morning Lead Meeting Summary]

Futures:

Overnight, LME lead opened at US$2,003/mt, fluctuated upward during the Asian session to reach a high of US$2,014/mt, then declined steadily during the European session to a low of US$1,995/mt before consolidating. It finally closed at US$1,997.5/mt, down US$6/mt or 0.3%. Overnight, the most-traded SHFE lead contract opened at a low of 16,855 yuan/mt, fluctuated upward after the opening bell, reached a high of 16,920 yuan/mt, stabilized briefly, then pulled back to the daily average line. It consolidated slightly before the close and finally closed at 16,890 yuan/mt, up 5 yuan/mt or 0.03%.

Macro: Michelle Bowman, Vice Chair of the US Fed, expressed support for three interest rate cuts this year and urged the Fed to initiate a rate cut at its September policy meeting. According to data from CME FedWatch, investors currently believe there is an 88.9% probability that the Fed will cut interest rates by 25 basis points in September. Starting from September 30 this year, the US government will no longer provide tax credits for EVs, and US EV sales may plummet after a surge. Domestically, the implementation regulations for the VAT law were open for public comment until September 10; Central Clearing Company: From now on, overseas central bank-like institutions are no longer required to provide a commitment letter for agreement signing.

Spot fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at premiums of 30-20 yuan/mt against the SHFE lead 2509 contract; in the Jiangsu, Zhejiang, Shanghai market, Jijin and JCC lead were quoted at premiums of 40-30 yuan/mt against the SHFE lead 2509 contract. SHFE lead continued to hold up well but failed to reach the 17,000 yuan/mt level. Suppliers had differing views on selling, and some warrant cargoes in the Jiangsu, Zhejiang, Shanghai region were quoted at market prices, with premiums unchanged from last Friday. However, the discounts for cargoes self-picked up from electrolytic lead smelters widened, with mainstream regional quotes at premiums of 20 yuan/mt to discounts of 70 yuan/mt against the SMM #1 lead average price ex-works, or at premiums of 150-70 yuan/mt against the SHFE lead 2509 contract. For secondary lead, smelters maintained their pricing stance and sold secondary refined lead at premiums of 0-50 yuan/mt against the SMM #1 lead average price ex-works. Additionally, as lead prices rose, downstream enterprises' purchasing enthusiasm was average. Large enterprises mainly purchased under long-term contracts, and spot market transactions did not improve significantly.

Inventory: On August 8, LME lead inventory decreased by 2,575 mt to 265,800 mt. According to SMM, as of August 11, the total social inventory of lead ingots in five regions tracked by SMM reached 70,000 mt, down 1,900 mt from August 4 and down 1,100 mt from August 7.

Lead price forecast for today:

On the supply side, recently, there have been both increases and decreases in production at primary and secondary lead enterprises, resulting in significant regional differences in lead ingot supply. Due to losses in the secondary lead sector, smelters have mostly refused to budge on prices when selling, leading to an inverted price relationship between secondary refined lead and primary lead. As a result, downstream enterprises have shown a preference for purchasing from the primary lead sector. The traditional peak season for the lead-acid battery sector has been unremarkable, with downstream enterprises cautious about increasing production and many remaining hesitant in their procurement and stockpiling activities. Some enterprises have chosen to source materials from nearby social warehouses, and the decline in social warehouses' inventory has continued. Additionally, as this week approaches the delivery of the SHFE lead 2508 contract, suppliers have no short-term intention to expand discounts for selling, and the expected decline in social inventory may slow down. Lead prices are likely to continue fluctuating rangebound.