Fundamentals Improve, Lead Prices Consolidate [SMM Lead Morning Session Summary]

Futures:

Overnight, LME lead opened at $1,988.5/mt, holding up well during the Asian session but in the doldrums during the European session, dropping to a low of $1,983.5/mt, and finally closing at $1,987/mt, down $5/mt or 0.25%.

Overnight, the most-traded SHFE lead 2510 contract opened at 16,925 yuan/mt, initially rising slightly to 16,960 yuan/mt before fluctuating downward, reaching a low of 16,880 yuan/mt, and eventually closing at 16,890 yuan/mt, down 25 yuan/mt or 0.15%.

On the macro front, copper, silver, lead, and silicon were added to the US critical mineral list, marking the most significant adjustment since its first release in 2018. Trump threatened to impose a 200% tariff on China over rare earth magnet supplies. Foreign Ministry spokesperson Guo Jiakun stated that China's position on tariffs has been repeatedly clarified. On August 26, Abe Lowell, the lawyer for US Fed Governor Lisa Cook, announced plans to file a lawsuit against Trump's dismissal of Cook. Domestically, on August 26, the State-owned Assets Supervision and Administration Commission (SASAC) Party Committee held an expanded meeting, emphasizing that central state-owned enterprises should further deepen industrial support for Tibet, introducing more practical and targeted measures. The State Council's official website released the "Opinions on Deepening the 'Artificial Intelligence+' Action," setting out overall requirements: by 2027, achieve extensive and deep integration of artificial intelligence with six key areas.

Spot fundamentals:

In the Shanghai market, Chihong and JCC lead were quoted at parity with the SHFE 2509 contract; in the Jiangsu-Zhejiang market, Jijin and JCC lead were quoted at -20~0 yuan/mt against the SHFE 2509 contract. As SHFE lead continued to strengthen, approaching the 17,000 yuan/mt level, suppliers showed mixed attitudes, with some expanding discounts while others refused to budge on prices due to limited stock. Downstream enterprises, wary of high prices, reduced procurement and inquiries, with some focusing on long-term contracts and the spot order market remaining sluggish. During this period, primary lead from major production areas was quoted at -50~+50 yuan/mt against the SMM #1 lead average price. In the secondary lead sector, smelters' reluctance to budge on prices slightly decreased, with secondary refined lead quoted at -50~0 yuan/mt against the SMM #1 lead average price.

Inventory: As of August 26, LME lead inventory decreased by 1,500 mt to 271,550 mt; as of August 25, total social inventory of SMM lead ingots across five locations stood at 68,300 mt, down 2,700 mt from August 18 and 1,600 mt from August 21.

Today's lead price forecast:

Recently, downstream consumption in the lead market has remained stable, with no significant increase in procurement and stockpiling, still mainly driven by just-in-time procurement. However, the supply of refined lead is constrained by raw material limitations, with more pronounced contradictions — secondary lead enterprises face losses and a shortage of scrap supply. After the expectations for production cuts due to maintenance in September were realized, the supply of secondary refined lead declined as expected. In the primary lead market, the tight balance between supply and demand for lead concentrates continues to intensify, with some smelters experiencing a decline in raw material inventory, and a few small-scale smelters possibly not meeting production expectations. The short-term weakening of the US dollar has provided ongoing macroeconomic support, and fundamentals have improved, providing strong support for lead prices.

Data Source Statement: Apart from publicly available information, other data are derived from public information, market exchanges, and SMM's internal database model, processed by SMM for reference only and do not constitute decision-making advice.