SMM October 23:
The most-traded SHFE lead 2511 contract opened at 17,190 yuan/mt today. Supported by steady growth in domestic lead consumption and a drop in social inventory to a new low in over a year, SHFE lead maintained a strong upward trend after opening. It broke through the resistance level of 17,300 yuan/mt and climbed to a high of 17,760 yuan/mt, before pulling back slightly towards the close and finally settling at 17,615 yuan/mt, up 2.65%. The contract recorded a large bullish candlestick with no lower shadow, with open interest at 23,288 lots.
Recently, downstream enterprises showed strong purchase willingness for lead ingots, while the pace of production resumptions at secondary lead enterprises remained relatively slow. The digestion of primary lead accelerated, leading to a shortage of cargoes self-picked up from production sites. With lead prices rising sharply, smelting profits improved and the import window for lead opened. Market participants will monitor whether the pace of production resumptions at secondary lead smelters accelerates and the extent to which inflows of overseas lead ingots supplement the Chinese market, while remaining cautious about a potential pullback after the rapid price rise.
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