LME Lead Inventory Surged Significantly Overnight, Secondary Refined Lead Supply Slowly Recovers [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,994/mt and fluctuated downward during Asian trading hours. As it entered European trading hours, it continued to weaken and then came under pressure from the intraday average line, consolidating sideways. It hit a low of $1,975/mt and finally closed at $1,977.5/mt, down by $16/mt or 0.8%.

Overnight, the most-traded SHFE lead 2511 contract opened lower at 17,010 yuan/mt, rose slightly in early trading to hit a high of 17,075 yuan/mt, and then continued to weaken, falling below the intraday average line. It finally closed at 17,015 yuan/mt, down by 70 yuan/mt or 0.41%.

On the macro front: Powell said that since the September FOMC monetary policy meeting, the outlook for inflation and employment seemed to have changed relatively little, but he emphasized that there were increasing signs of weakness in the labour market. Powell suggested that even though the government shutdown had severely weakened the US Fed's grasp of the economic situation, it was still expected to cut interest rate by another 25 basis points later this month. On October 14, the National Development and Reform Commission (NDRC) issued the "Special Management Measures for Central Budgetary Investment in Energy Conservation and Carbon Reduction Projects." The "Measures" mentioned energy conservation and carbon reduction projects in key industries. It supports energy conservation and carbon reduction transformations in key industries such as power, steel, non-ferrous metals, building materials, petrochemicals, chemicals, and machinery.

Spot fundamentals:

In the Shanghai market, Honglu Lead was quoted on par with the SHFE lead 2511 contract. SHFE lead continued to consolidate at high levels, with limited market liquidity and few quotations from suppliers. Supply was relatively concentrated in north China, while it was relatively loose in South China. The ex-factory quotations of electrolysis lead smelters in mainstream producing areas were quoted at premiums of 0-100 yuan/mt against the SMM #1 lead average price. Meanwhile, the supply of secondary lead increased, with tax-exclusive prices for secondary refined lead being relatively low and tax-inclusive prices remaining firm. Downstream enterprises made purchases based on demand and selected the best options, leading to a relatively improved regional trading situation in the spot market.

Inventory: As of October 14, LME lead inventory increased by 9,550 mt to 246,550 mt. According to SMM, as of October 13, the total social inventory of lead ingots in five regions reached 36,000 mt, a decrease of 6,100 mt from September 29 and about 900 mt from October 9.

Today's lead price forecast:

The supply of secondary lead in the refined lead spot market has been slowly increasing (), with significant regional differences in refined lead supply. Downstream enterprises are making purchases based on demand and selecting the best options, with mediocre consumption performance. In terms of raw material supply, scrap batteries and lead concentrates continue to exhibit a trend of being more likely to rise than fall, providing continuous bottom-line support for lead prices. The peak consumption season for storage batteries is more than halfway over, with individual enterprises experiencing a slight pullback in terminal orders compared to September. After secondary lead enterprises gradually resume production and complete long-term contract deliveries in late October, the liquidity of lead in the market will gradually become looser, which may subsequently put lead prices under pressure.