Interest Rate Cut Expectations Coupled with Supply Reduction Boost Lead Prices to Surge Higher, Potential Pullback Risks May Need Caution [SMM Lead Morning Meeting Minutes]

Futures:

On Friday night, LME lead opened at $1,993/mt, hovering around the daily moving average during the Asian session. It fluctuated upward during the European session, touching a high of $2,020/mt before consolidating slightly, and finally closed at $2,079/mt, up $23.5/mt, a gain of 1.15%.

On Friday night, the most-traded SHFE lead contract opened at 17,050 yuan/mt, dipped to an intraday low of 17,030 yuan/mt at the beginning of the session, then fluctuated upward to a high of 17,175 yuan/mt. After a slight pullback, it finally closed at 17,140 yuan/mt, up 175 yuan/mt, a gain of 1.03%.

Ahead of the US Fed's important meeting this week, US President Trump expects it to "cut interest rates significantly." The US Fed is expected to ease policy at this meeting, the first time in nine months. The Ministry of Commerce decided to initiate an anti-dumping investigation on imported related analog chips originating from the US starting September 13, 2025. China also launched an anti-discrimination investigation regarding US measures in the integrated circuit sector against China.

Spot Fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at premiums of -50~0 yuan/mt against the SHFE lead 2510 contract; in the Jiangsu-Zhejiang market, JCC and Jijin lead were quoted at premiums of -30~0 yuan/mt against the SHFE lead 2510 contract. SHFE lead held up well, with most suppliers selling at market prices. Some held firm on offers in anticipation of delivery, while downstream enterprises mainly procured through long-term contracts and adopted a wait-and-see approach for spot orders due to high prices. Quotations for primary lead smelter cargoes self-picked up from production site varied between the north and south markets, with mainstream producing areas offering premiums ranging from -50 yuan/mt to +70 yuan/mt against the SMM #1 lead average price ex-works. For secondary lead, due to limited spot supply, secondary refined lead was quoted at premiums of -50 yuan/mt to +50 yuan/mt against the SMM #1 lead average price ex-works.

Inventory: As of September 12, LME lead inventory decreased by 3,050 mt to 229,575 mt; as of September 11, the total social inventory of lead ingots in five regions tracked by SMM stood at 67,000 mt, up 900 mt from September 4 but down over 600 mt from September 8.

Today's Lead Price Forecast:

From a macro perspective, strengthened expectations for US Fed interest rate cuts boosted lead prices. Domestic primary and secondary lead smelters continued maintenance, but supply tightness for lead concentrates and scrap battery raw materials persisted. Many smelters in Anhui, the largest secondary lead producing region, were under maintenance. With only half a month until the National Day holiday, the market awaits downstream pre-holiday stockpiling, which may support lead prices to hold up well. However, it is worth noting that the recent expansion of the SHFE/LME lead price ratio could potentially open the import window for lead ingots. After the price surge, be alert to the risk of a pullback from highs.