Downstream Cargo Pick-Up and Social Inventory Decline, Late October Supply Easing Expectations Keep Lead Prices Under Pressure [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,017.5/mt, fluctuated downward under pressure from the daily moving average during the Asian session, and continued to weaken, probing a low of $1,985.5/mt during the European session. It saw a slight rebound just before closing, ultimately settling at $1,993.5/mt, down $21/mt or 1.04%.

Overnight, the most-traded SHFE lead 2511 contract opened lower at 17,050 yuan/mt, rose to a high of 17,155 yuan/mt early in the session, then pulled back to fluctuate around the daily moving average. It experienced a slight correction toward the close, finally settling at 17,095 yuan/mt, down 60 yuan/mt or 0.35%.

On the macro front: Vance signaled some moderation regarding Trump's latest tariff threats. US Fed's Anna Paulson stated support for two more 25-basis-point interest rate cuts this year. She noted that if inflation surges, the Fed would have to take action, emphasizing the importance of achieving the 2% inflation target. On October 13 local time, it was learned that US President Trump, during his visit to Israel, said, "The Gaza war is over." The Ministry of Transport issued the "Implementation Measures for Charging Special Harbor Dues on US Vessels."

Spot Fundamentals:

In the Shanghai market, Honglu lead was offered at parity with the SHFE lead 2511 contract. SHFE lead hovered at highs, but as the delivery date approached, suppliers reduced offerings, resulting in scarce quotes in the Jiangsu, Zhejiang, and Shanghai region. Meanwhile, primary lead cargoes self-picked up from smelters were relatively ample, with price differences persisting between the north and south. Offers in Henan were firm, mostly at a premium to the SMM #1 lead average price, while discounts were seen in Hunan. Additionally, as secondary lead smelters gradually resumed production, regional supply tightness eased. Downstream enterprises had more procurement options, and overall market trading activity was moderate.

Inventory: As of October 13, LME lead inventory held steady at 237,000 mt. According to SMM, as of October 13, the total social inventory of lead ingots across five major regions stood at 36,000 mt, down 6,100 mt from September 29 and approximately 900 mt from October 9.

Today's Lead Price Forecast:

Due to demand being front-loaded by downstream enterprises before the National Day holiday, October lead ingot supply was largely pre-sold. Post-holiday inventory buildup at lead smelters was limited, thus significant discount selling did not emerge in the spot market. As the SHFE lead 2510 contract is expected to enter delivery this week, some downstream enterprises continued to consume social inventory near consumption areas. Consequently, social inventory of lead ingots decreased rather than increased as the delivery date approached. Based on the current open interest, the estimated delivery volume for lead ingots this month is about 23,000 mt, while the current social inventory remains above 30,000 mt. It will still take some time for secondary lead enterprises to resume production and achieve stable supply in October. The availability of lead in the market is expected to gradually increase after late October.