Trading in the Pre-Holiday Market Slows Down, Lead Prices May Remain Weak [SMM Lead Morning Meeting Minutes]

Futures:

Last Friday, LME lead opened at $2,008/mt. With no prominent trading contradictions in overseas markets, LME lead traded within a high range throughout the day, mostly consolidating between $2,000-2,010/mt. Although it attempted to break above $2,010/mt during the session due to a weaker US dollar, it ultimately failed and closed at $2,001.5/mt, down 0.37%.

Last Friday, the most-traded SHFE lead 2511 contract opened at 17,065 yuan/mt. Early in the session, SHFE lead attempted to break above 17,100 yuan/mt due to lead ingot destocking. However, as traders gradually exited the market ahead of the National Day holiday, trading activity declined, and SHFE lead fluctuated and pulled back, eventually closing at 17,075 yuan/mt, down 0.09%. Its open interest fell to 59,263 lots, a decrease of 1,399 lots from the previous trading day.

On the macro front:

PBOC: Implement and refine the moderately accommodative monetary policy, utilize the securities, fund, and insurance company swap facilities and the stock repurchase and increase holdings relending, ensure the execution of various monetary policy measures, and fully release the policy effects. The State-owned Assets Supervision and Administration Commission held a forum on the economic operations of state-owned enterprises: Take the lead in resolutely resisting "involutionary" competition. "Anti-involution" began to show its effect, with China's profits of industrial enterprises above the designated size surging 20.4% YoY in August, the highest growth rate since December 2023, reversing the 1.5% decline seen in July.

:

In the lead spot market last Friday, approaching the National Day holiday, circulating spot cargoes were limited, and suppliers offered few warrant quotations. Quotations in the Jiangsu, Zhejiang, Shanghai region were at parity with the SHFE lead 2511 contract. Simultaneously, suppliers continued pre-selling cargoes for the following week, with mainstream origin quotations at discounts of 30 yuan/mt to premiums of 80 yuan/mt against the SMM #1 lead average price, ex-works. Additionally, the lead ingot import arbitrage window opened. Besides imported crude lead, a small amount of imported refined lead quotations emerged recently. Downstream enterprises made purchases based on demand. Imported lead is expected to arrive domestically in October. Furthermore, most other lead-acid battery enterprises have completed pre-holiday stockpiling and are currently only maintaining just-in-time procurement.

Inventory: As of September 26, LME lead inventory decreased by 125 mt to 219,425 mt; the total weekly SHFE lead ingot inventory was 49,209 mt, a decrease of 8,123 mt from the previous week.

Today's Lead Price Forecast:

This week, there are only two trading days due to the National Day holiday. Downstream enterprises are about to go on holiday, and lead smelters are actively clearing pre-holiday inventory. The destocking speed of lead ingots may slow down later. In addition, the lead ingot import arbitrage window is open, and some downstream enterprises or lead smelters have pre-purchased imported lead ingots arriving in October. Lead prices in October are expected to be under pressure and weaken. It is expected that lead prices will remain in a consolidation phase before the concentrated resumption of production by secondary lead enterprises and the arrival of imported lead at ports. However, once the supply increase materializes, the trend of lead prices will weaken.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model. These data are for reference only and do not constitute decision-making advice.