Import and Weak Consumption Expectations, Beware of the Risk of Lead Prices Retreating After Rapid Rise [SMM Lead Morning Meeting Minutes]

Futures:

Last Friday, LME lead opened at $2,012/mt. With LME lead inventory continuing to decline and the US dollar index weakening, LME lead fluctuated upward throughout the day, reaching an intraday high of $2,020/mt. However, by the close, it had given back some gains, finally settling at $2,016.5/mt, up 0.22%. Recently, the overall trading center for LME lead has shifted higher, marking six consecutive days of gains.

Last Friday, the most-traded SHFE lead 2512 contract opened at 17,640 yuan/mt. Benefiting from lead ingot destocking, SHFE lead started strong at the opening. However, the upward momentum was limited, and it subsequently entered a consolidation phase, trading mostly between 16,600-16,650 yuan/mt for the majority of the session. It finally settled at 17,575 yuan/mt, up 0.26%. Open interest reached 86,815 lots, an increase of 2,969 lots from the previous trading day.

On the Macro Front:

China-US Kuala Lumpur Economic and Trade Consultations: Basic consensus reached on arrangements to address each other's concerns. People's Daily Zhong Sheng: Jointly maintain the hard-won results of the China-US economic and trade consultations. Li Chenggang: China and the US conducted constructive discussions on this; the US side expressed a firm stance, and the Chinese side was resolute in safeguarding its interests.

:

In the lead spot market last Friday, SHFE lead maintained a high-level consolidation trend. Suppliers' willingness to sell was average, with few and firm offers. Quotations in the Jiangsu, Zhejiang, Shanghai region were at parity with the SHFE lead 2511 contract. Inventories at several smelters in Henan and Hunan regions generally declined, and offers decreased compared to the previous trading day. A small number of spot order offers were at premiums of 100-200 yuan/mt against the SMM #1 lead average price, ex-works. Furthermore, as the spread between futures and spot prices widened, traders showed a greater inclination to ship to delivery warehouses, leading to a further reduction in spot availability in the spot order market. Additionally, downstream enterprises exhibited a strong wait-and-see sentiment. With scarce supply and high prices in the spot market, purchasing of high-priced lead was cautious, and most downstream enterprises primarily relied on long-term contract purchases or digested existing inventory.

Inventory: As of October 24, LME lead inventory decreased by 4,375 mt to 235,375 mt; the total weekly SHFE lead ingot inventory was 36,333 mt, a WoW decrease of 5,368 mt.

Today's Lead Price Forecast:

Recently, the tight supply situation in the lead market has persisted, particularly with scarce availability of primary lead delivery brands. October goods in some regions were sold out, and November goods were being pre-sold. Coupled with the current social inventory dropping to a low level seen in over a year, this supports lead prices to hold up well. However, it is worth noting that the profit margin for lead ingot imports has widened, with new batches of imported lead being traded. Simultaneously, lead-acid battery enterprises showed signs of production cuts towards month-end, suggesting lead consumption may decrease correspondingly. Lead prices are expected to face the risk of retreating after a rapid rise.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and SMM's internal database model, and are for reference only, not constituting decision-making advice.