Weak performance during peak consumption season, with slightly insufficient momentum for lead price rebound [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $2,013.5/mt. During the Asian session, it consolidated around the intraday average line. Entering the European session, it touched a high of $2,019/mt before fluctuating downward. After hitting a low of $1,983.5/mt, it rebounded slightly and finally closed at $1,988/mt, down $28/mt or 1.39%.

Overnight, the most-traded SHFE lead contract opened lower with a gap at 16,880 yuan/mt. After consolidating around the 16,900 yuan/mt level under pressure in the early session, it fluctuated downward, hitting a low of 16,765 yuan/mt before finally closing at 16,775 yuan/mt, down 150 yuan/mt or 0.89%.

Macro: US Treasury Secretary hints at possible 50 basis point interest rate cut - Following data showing mild US inflation in July, the CME Group's FedWatch tool indicated that the market saw a 99.9% probability of a 25 basis point interest rate cut at the Fed's September meeting. Treasury Secretary Bessent stated that, given recent weak employment data, he believed the Fed might cut interest rates by 50 basis points. Domestically, new social financing in the first seven months reached 23.99 trillion yuan, with new loans totaling 12.87 trillion yuan. M2 grew by 8.8% YoY at the end of July. This year, 188 billion yuan in ultra-long-term special treasury bonds to support equipment renewal investment subsidies have been fully allocated.

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 market, Jijin and JCC lead were quoted at premiums of 40-30 yuan/mt against the SHFE lead 2509 contract. With SHFE lead continuing to consolidate and approaching delivery, some suppliers' enthusiasm for selling decreased slightly, and quoted premiums remained largely unchanged. Downstream enterprises purchased on a need-based and selective basis, but purchases were relatively dispersed. Additionally, cargoes self-picked up from electrolytic lead smelters continued to be sold at premiums, with regional quotations ranging from a discount of 20 yuan/mt to a premium of 50 yuan/mt against the SMM #1 lead average price, or from a discount of 170-120 yuan/mt against the SHFE lead 2509 contract. For secondary refined lead, the market saw an increase in available supply, with quotations ranging from a discount of 50 yuan/mt to a premium of 50 yuan/mt against the SMM #1 lead average price. Downstream battery producers showed improved willingness to inquire about prices but remained cautious in comparing prices, resulting in generally moderate transaction volumes for secondary refined lead.

Inventory: On August 12, LME lead inventory decreased by 25 mt to 262,225 mt, with increases and decreases in Singapore and Kaohsiung warehouses offsetting each other. 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:

At the beginning of the week, prices held up well, with secondary refined lead suppliers showing moderate willingness to sell, maintaining small premiums against the SMM #1 lead average price. On the raw material side, tight supply of lead concentrates and scrap continued to support costs. Local supply of secondary refined lead did not increase as expected, and attention should still be paid to the realization of conventional maintenance expectations at primary lead smelters in Q3. The downstream lead-acid battery sector showed mediocre performance during the peak consumption season, with strong wait-and-see sentiment in the market and slightly insufficient momentum for lead price rebound.

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