Lead prices fluctuated at highs with cautious sentiment among downstream buyers [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $1,985.5/mt, fluctuated around the daily moving average during the Asian session, and after touching a high of $1,998/mt in the European session, it fluctuated downward to a low of $1,965/mt, finally closing at $1,992/mt with a gain of $11/mt, up 0.56%.

Overnight, the most-traded SHFE lead 2511 contract opened at 16,790 yuan/mt, initially reaching a high of 16,970 yuan/mt, then fluctuated downward to a low of 16,775 yuan/mt, and after a slight consolidation, closed at 16,840 yuan/mt, up 72 yuan/mt, or 0.43%.

On the macro front, the US Q2 real GDP annualized revision increased 3.3% MoM, higher than the expected 3.1% and the initial 3%. This was mainly due to a rebound in business investment and significant trade factors. Domestically, the "Opinions on Promoting High-Quality Urban Development" by the Central Committee of the Communist Party of China and the State Council were released. It supports the Beijing-Tianjin-Hebei, Yangtze River Delta, and Guangdong-Hong Kong-Macao Greater Bay Area city clusters in becoming world-class urban agglomerations; it also calls for city-specific policies to enhance urban development momentum and deepen the construction of international consumer centers.

Spot fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at premiums of 0~10 yuan/mt against the SHFE 2509 contract; in the Jiangsu-Zhejiang market, Jijin lead was quoted at parity against the SHFE 2509 contract. SHFE lead maintained a rangebound fluctuation, with suppliers showing little enthusiasm in quoting, and the premiums and discounts were basically flat compared to yesterday. Additionally, the price differences for primary lead from smelters for self-pickup were relatively small, with mainstream origin prices ranging from a discount of 50 yuan/mt to a premium of 50 yuan/mt against the SMM #1 lead average price. In the secondary lead sector, supply tightened, and smelters refused to budge on prices, with secondary refined lead quotes ranging from a discount of 25 yuan/mt to a premium of 25 yuan/mt against the SMM #1 lead average price. With lead prices fluctuating at highs, downstream enterprises were cautious and made limited purchases, and given the general end-use consumption, they continued to make just-in-time procurement, or primarily relied on long-term contracts post-holiday.

Inventory: As of August 26, LME lead inventory decreased by 4,975 mt to 262,500 mt; as of August 28, the total social inventory of SMM lead ingots across five locations was 67,100 mt, down 2,800 mt from August 21 and 1,200 mt from August 25.

Today's lead price forecast:

Despite the traditional peak consumption season for lead-acid batteries in August-September, the improvement in end-user consumption is limited, and downstream enterprises continue to produce based on sales. Under the current backdrop of "high-priced lead" raw materials, the willingness of downstream buyers to stockpile has not improved with the arrival of the peak season. In terms of social inventory, despite reduced supply and transportation constraints, the decline in lead ingot social inventory was only marginal. After secondary lead smelters entered a state of maintenance, the market supply of secondary refined lead decreased while also facing loss issues. The quotations from secondary refined lead suppliers were almost on par with those of primary lead, leading downstream enterprises to prefer just-in-time procurement of primary lead. Additionally, some companies continued to purchase lead ingots from nearby warehouses, causing the social inventory of lead ingots to continue its downward trend. In the short term, lead prices may still experience sideways movement.

Data source statement: Apart from publicly available information, other data is processed by SMM based on public information, market exchanges, and SMM's internal database model, for reference only and does not constitute decision-making advice.