Lead prices stay high, eyes on recovery of secondary lead supply [SMM Lead Morning Meeting Minutes]

Futures:

On Friday night in the Asian session, LME lead moved sideways around the intraday moving average. Entering the European session, it touched a high of $2,046/mt before fluctuating downward and weakening, dipping to $2,010/mt before the close, and finally settled at $2,014.5/mt, down $6/mt, a decrease of 0.30%.

On Friday night, the most-traded SHFE lead 2511 contract opened at 17,160 yuan/mt, initially moved down to test a low of 17,095 yuan/mt, then fluctuated upward, touched a high of 17,290 yuan/mt before coming under pressure and pulling back, finally settled at 17,140 yuan/mt, up 15 yuan/mt, an increase of 0.09%.

On the macro front, the US threatened to impose 100% tariffs on China and implement export controls on all critical software. This dual threat of "tariff hikes + technology blockade" escalated trade frictions between the two sides, adding new uncertainties to global industry and supply chains; Seven departments including the MIIT issued the "Implementation Plan for Further Promoting the Innovative Development of Service-Oriented Manufacturing (2025-2028)". It involves strengthening new-type information infrastructure construction, deploying computing infrastructure as needed, accelerating the integration and application of computing power with industries, and deepening the integrated innovation and large-scale application of "5G+Industrial Internet".

Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted at parity against the SHFE lead 2510 contract or the SHFE lead 2511 contract. SHFE lead continued its strong fluctuating trend, suppliers had varying selling strategies, some expanded discounts to actively sell, while others, due to limited cargo, refused to budge on prices, especially for primary lead smelter cargoes self-picked up from production site, where quotations showed significant divergence. Mainstream origin quotations were at premiums of 0-125 yuan/mt against the SMM #1 lead average price ex-works. Meanwhile, secondary lead smelter production gradually recovered, but currently circulating cargoes were limited. Secondary refined lead was quoted at discounts of 50 yuan/mt to premiums of 25 yuan/mt against the SMM #1 lead average price ex-works. Downstream enterprises mainly purchased based on long-term contracts, some purchased as needed, and preferred sources with large discounts (against SHFE lead).

Inventory: As of October 10, LME lead inventory decreased by 450 mt to 237,000 mt; As of October 9, the total social inventory of lead ingots in five regions tracked by SMM fell to 36,900 mt, down 9,500 mt from September 25 and down 5,200 mt from September 29.

Today's Lead Price Forecast:

Affected by the supply decline in September-October and downstream enterprises gradually picking up goods after the National Day holiday, social inventory of lead ingots did not see the usual post-holiday accumulation, supporting lead prices to fluctuate at highs. After the holiday, SHFE lead strengthened and the spot-futures price spread widened, suppliers' intention to transfer goods to delivery warehouses increased. Subsequent attention should still be paid to the transfer of delivery brand lead ingots to delivery warehouses and the recovery of secondary refined lead production and supply. If SHFE lead prices continue to strengthen, secondary refined lead may turn profitable. Production recovery in October is still expected, and lead prices are likely to hold up well in the short term, though there remains a risk of retreat after rapid rise.