Supply Reduction Coupled with Scrap Price Easing, Short-Term Lead Prices May Maintain Fluctuating Trend [SMM Lead Morning Meeting Summary]

Futures:

Overnight, LME lead opened at $1,989.5/mt, fluctuating in the doldrums during the Asian session, mainly trading between $1,985-1,990/mt. Meanwhile, expectations for US Fed interest rate cuts intensified, and the US dollar index fluctuated downward, while LME lead stopped falling and rebounded. Particularly after LME lead inventories plunged by over 5,000 mt, LME lead rose sharply but failed to firmly break the $2,000/mt psychological barrier, eventually pulling back from highs to close at $1,990/mt, up 0.1%.

Overnight, the most-traded SHFE lead 2510 contract opened at 16,920 yuan/mt. As domestic lead ingot production cuts gradually progressed, SHFE lead held up well, though weak consumption remained a key factor limiting price gains. The contract hit a session high of 16,940 yuan/mt but faced strong resistance at the 17,000 yuan/mt level, eventually settling at 16,915 yuan/mt, up 0.15%. Open interest rose by 804 lots to 49,688 lots from the previous trading day.

On the macro front:

China’s August exports denominated in US dollars grew 4.4% YoY, while imports rose 1.3% YoY, with notable growth in integrated circuit and auto exports. Seasonal recovery in bulk commodity imports drove rebounds in crude oil, iron ore, and copper, while soybean imports hit a record high. Rare earth exports saw volume drop but value surge, up 51% MoM. Trump announced readiness to impose second-phase sanctions on Russia. France’s third prime minister in a year resigned after failing a confidence vote, with Beroux submitting his resignation on Tuesday. Fiscal expansion expectations intensified as Shigeru Ishiba’s resignation triggered a plunge in Japan’s long-term government bonds.

:

In yesterday’s lead spot market, SHFE lead held up well, with suppliers quoting prices accordingly. Quotations in Jiangsu, Zhejiang, and Shanghai were at discounts of 50-0 yuan/mt against the SHFE lead 2510 contract. Downstream enterprises showed weak procurement interest with limited inquiries, while smelters actively offered cargoes. Premiums and discounts for self-picked-up cargoes from production sites continued to narrow, with mainstream origins quoted at discounts of 50 yuan/mt to premiums of 50 yuan/mt against the SMM #1 lead average price ex-works. For secondary refined lead, due to regional supply disparities, quotations ranged from discounts of 100 yuan/mt to premiums of 25 yuan/mt against the SMM #1 lead average price ex-works.

Inventory-wise: As of September 8, LME lead inventories fell by 5,075 mt to 243,125 mt. SMM lead ingot social inventories across five regions totaled 67,700 mt, up around 600 mt from September 1 and 1,500 mt from September 4.

Today’s lead price forecast:

Recently, logistics constraints in North and Central China were fully lifted. On one hand, spot market supply increased, widening spot discounts, especially in South China where self-picked-up cargoes mostly traded at discounts of 50-0 yuan/mt against the SMM #1 lead price ex-works. Secondary refined lead quotations also ranged from discounts of 100-0 yuan/mt against the SMM #1 lead average price ex-works. On the other hand, lead consumption remained sluggish, with downstream enterprises making just-in-time procurement sporadically. Some primary lead smelter inventories flowed into social warehouses, shifting lead ingot social inventories to an accumulation trend. In addition, secondary lead enterprises collectively implemented production cuts, which on one hand alleviated the inventory buildup pressure of lead ingots by reducing supply, while on the other hand, the demand for scrap from smelters relatively weakened, leading to a decline in scrap battery prices and a slight downward shift in the cost line of secondary lead.

Data Source Statement: Except for publicly available information, other data are derived from public information, market exchanges, and processed by SMM based on its internal database model, for reference only and not constituting decision-making advice.