Lead Prices Continue to Move Sideways, Refined Lead Imports Turn Profitable [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,979.5/mt and fluctuated upward during Asian trading hours. Entering European trading hours, it continued to rise, reaching a high of $1,997.5/mt before declining to a low of $1,978/mt, and ultimately closed at $1,986/mt, up by $8.5/mt or 0.43%.

Overnight, the most-traded SHFE lead 2511 contract opened lower at 17,110 yuan/mt, rose slightly to a high of 17,150 yuan/mt in early trading, then fell below the intraday average price, and traded sideways around the 17,100 yuan/mt level before ultimately closing at 17,115 yuan/mt, up by 60 yuan/mt or 0.35%.

On the macro front: On October 15, the US Fed released its national economic conditions survey report, indicating a general decline in agricultural, energy, and transportation activities across reporting regions. The outlook for future economic growth varied by region and industry. Data released by the National Bureau of Statistics (NBS) showed that China's CPI rose by 0.1% MoM and fell by 0.3% YoY in September, while core CPI increased by 1% YoY, marking the fifth consecutive month of expansion and the first return to a 1% increase in nearly 19 months. China will introduce 158 reform measures across seven key areas, including market-oriented allocation reforms for data elements and the deep integration of technological innovation with industrial innovation, in seven national digital economy innovation and development pilot zones: Tianjin, Xiong'an New Area, Shanghai, Jiangsu, Zhejiang, Guangdong, and Sichuan.

Spot market fundamentals:

Honglu lead in the Shanghai market was quoted on par with the SHFE lead 2511 contract. Today, the SHFE lead 2510 contract entered delivery, resulting in limited market liquidity and restricted supplier quotations. Meanwhile, there remained regional disparities in the availability of cargoes self-picked up from electrolytic lead smelters, with downstream enterprises continuing to purchase as needed, primarily through long-term contract pick-ups. This was particularly evident in northern China, where liquidity was limited, prompting suppliers to refuse to budge on prices. In contrast, the southern China market saw increased secondary lead supply, with secondary refined lead quotations against the SMM #1 lead average price at discounts of 120-0 yuan/mt ex-works. As a result, downstream demand was diverted, and spot market activity remained moderate.

Inventory: As of October 15, LME lead inventory increased by 8,225 mt to 254,775 mt, primarily driven by increases in Singapore warehouses. According to SMM, as of October 13, the total social inventory of lead ingots across five regions in China reached 36,000 mt, a decrease of 6,100 mt from September 29 and approximately 900 mt from October 9.

Today's lead price forecast:

The lead import window briefly opened recently, with crude lead imports becoming profitable since mid-to-late September. Subsequently, a small volume of high-grade imported refined lead is expected to arrive at ports, creating a bearish expectation for incremental supply in the spot market and weighing on lead prices. Regarding downstream end-use consumption, the peak season for electric bicycle replacements is drawing to a close, while new EV orders and the automotive sector have performed moderately. Affected by tariffs, orders in the battery export sector have remained relatively mediocre. Recently, the inventory of refined lead raw materials has been sufficient to maintain supply. In late October, it is still necessary to pay attention to the cost support provided by the prices of scrap batteries and lead concentrates as a floor for lead prices. The supply of lead in the market is gradually becoming more abundant, and in the short term, lead prices may continue to be in the doldrums.