Lead-Acid Battery Enterprises Implement Concentrated Production Cuts, Lead Prices Expected to Remain in the Doldrums [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,017/mt. With LME lead inventory continuing to destock and the US dollar index weakening, LME lead fluctuated upward for the second consecutive day, hitting an intraday high of $2,026.5/mt, reaching its highest level in over two weeks. It finally closed at $2,023.5/mt, up 0.35%. Recently, the overall trading center for LME lead has shifted higher, marking seven consecutive days of gains.

Overnight, the most-traded SHFE lead 2512 contract opened at 17,520 yuan/mt. Concentrated production cuts by medium and large domestic lead-acid battery enterprises and expectations of weaker lead consumption weighed on lead prices, causing SHFE lead to decline in a step-like pattern. It hit an intraday low of 17,405 yuan/mt before finally closing at 17,440 yuan/mt in the late session, down 0.43%. Its open interest fell to 82,756 lots, a decrease of 1,639 lots from the previous trading day.

On the macro front:

Wang Yi held a phone conversation with US Secretary of State Marco Rubio, expressing hope that both sides would move towards each other to prepare for high-level interactions between China and the US. Trump extended the US-Mexico trade negotiation period, stating that US-Canada negotiations would not resume "for some time." The US reached trade agreements with several Southeast Asian countries, but "details were lacking, and subsequent negotiations will determine whether key industries such as apparel and electronics can obtain tariff relief."

:

In the lead spot market yesterday, SHFE lead retreated from highs and continued to fluctuate, while spot market availability was limited. Due to the wide spread between futures and spot prices, some suppliers intended to ship to delivery warehouses, resulting in few spot market quotations, which remained firm. Quotations in the Jiangsu, Zhejiang, Shanghai region against the SHFE lead 2511 contract were at premiums of 0-80 yuan/mt. Additionally, quotations for primary lead cargoes self-picked up from production sites increased compared to last Friday, but most offers in Henan were for November delivery presales. Premiums in Hunan were lowered, with quotations against the SMM #1 lead average price at premiums of 30-150 yuan/mt ex-works. Meanwhile, downstream enterprises were cautious of high prices and purchased sparingly; some medium and large enterprises even planned holidays of 2-5 days. Inquiries were scarce, and spot order market transactions were sluggish.

Inventory: As of October 27, LME lead inventory decreased by 3,000 mt to 232,375 mt. The total social inventory of lead ingots across five regions tracked by SMM fell to 30,300 mt, down 7,400 mt from October 20 and down 1,600 mt from October 23, reaching the lowest level since September 2, 2024.

Today's Lead Price Forecast:

Following the sharp price surge last week, procurement enthusiasm among lead-acid battery enterprises significantly weakened. Social warehouse inventory in some regions stopped destocking and began to see a slight buildup. However, primary lead smelters in North and Central China have not fully resumed operations after maintenance, with lead ingot production from some enterprises already sold out for October. Current supply remains insufficient, and social inventory in North China continues to be depleted, dragging down the overall social inventory to maintain a declining trend. Social inventory of lead ingots is expected to remain low before November. Notably, however, medium to large lead-acid battery enterprises have recently implemented concentrated production cuts, leading to an expected weakening in lead consumption. Meanwhile, lead prices have shown a pattern where the domestic market underperforms the overseas market, and import profitability for lead ingots has gradually narrowed. In the short term, lead prices are expected to be in the doldrums.

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