Supply Decline Coupled with Pre-Holiday Stockpiling, Lead Price Trend Shows LME Outperforms SHFE [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,015/mt, edged up to a high of $2,017.5/mt during the Asian session, then weakened throughout the European session to hit a low of $1,999/mt before consolidating slightly, and finally closed at $2,001.5/mt, down $17.5/mt or 0.87%. Overnight, the most-traded SHFE lead contract opened at 17,150 yuan/mt, dipped to a low of 17,080 yuan/mt at the beginning of the session, then rose to fluctuate near the daily moving average, and finally closed at 17,105 yuan/mt, down 15 yuan/mt or 0.09%.

On the macro front: Data released by the New York Fed on Monday showed the US September manufacturing index plunged nearly 21 points to -8.7, significantly below the market expectation of 5.0. A reading below zero indicates contraction in manufacturing activity. According to CCTV News, on the 15th local time, the Trump administration announced that import tariffs on Japanese cars would be reduced to 15% effective from 00:01 US Eastern Time on the 16th (13:01 Japan time on the 16th). China and the US reached a framework consensus in economic and trade talks.

Spot fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at premiums of -30~0 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 today, and it was also the delivery day for the SHFE lead 2509 contract. Most suppliers prioritized delivery matters, while others had divergent quotations. Delivery brand quotations were firm, while non-delivery brands continued to sell at discounts. Downstream enterprises mostly adopted a wait-and-see approach with limited procurement, and their inquiry enthusiasm was weaker than last week. In addition, mainstream producing areas of primary lead offered cargoes self-picked up from production site at premiums ranging from -50 yuan/mt to +120 yuan/mt against the SMM #1 lead average price ex-works, with a small number of enterprises suspending quotations. In the secondary lead sector, smelters sold following the market trend. Secondary refined lead was quoted at premiums of -100 yuan/mt to +50 yuan/mt against the SMM #1 lead average price ex-works, with some enterprises holding back goods in anticipation of price increases.

Inventory: As of September 15, LME lead inventory decreased by 3,950 mt to 225,625 mt. As of September 15, the total social inventory of lead ingots across five regions tracked by SMM reached 68,900 mt, up 1,200 mt from September 8 and up 1,900 mt from September 11.

Today's lead price forecast:

Monday was the delivery day for the SHFE lead 2509 contract. After delivery brand cargoes gradually arrived at warehouses over the weekend, social inventory increased as expected. Additionally, as mid-to-late September approaches, with only half a month left until the National Day holiday, downstream enterprises will traditionally enter the pre-holiday stockpiling phase. Only a few enterprises had already stockpiled a small amount in advance last week, and pre-holiday stockpiling this week and next week is expected to increase significantly. At the same time, primary lead and secondary lead enterprises are currently undergoing maintenance. Reduced supply combined with pre-holiday concentrated stocking demand may cause the social inventory of lead ingots to reverse and pull back, while lead prices are likely to continue to fluctuate at highs.