Low Inventory vs. Weak Consumption, Lead Prices Remain in the Doldrums [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,023.5/mt. It held up well initially but was more affected by the weakness in SHFE lead during the Asian session, causing its trading center to move lower, with the lowest point at $2,010.5/mt. Entering the European session, LME lead inventories continued to decline, leading LME lead to stop falling and rebound, once again refreshing the nearly two-week high to $2,027/mt. It finally closed at $2,025/mt, up 0.07%, recording a long lower shadow and the eighth consecutive positive closing.

Overnight, the most-traded SHFE lead 2512 contract opened lower at 17,315 yuan/mt. Affected by concentrated production cuts from downstream enterprises, SHFE lead once fell to 17,305 yuan/mt early in the session. However, with lead ingot inventories still at low levels, the tug-of-war between longs and shorts intensified. Subsequently, SHFE lead consolidated for a long time within the range of 17,365-17,405 yuan/mt, until it finally closed at 17,370 yuan/mt, down 0.32%. Its open interest decreased by 839 lots to 76,796 lots compared to the previous trading day.

On the macro front:

The full text of China's "16th Five-Year Plan" recommendations: Take extraordinary measures to promote decisive breakthroughs in key core technologies across the entire chain in key areas, fully implement the "AI+" action, and vigorously boost consumption. The "16th Five-Year Plan" recommendations mentioned finance 17 times. In other news, the US-Japan summit: Paying for the "US nuclear power super order," Takashi successfully pleased Trump. The US and South Korea will sign an agreement to strengthen cooperation in artificial intelligence and quantum technology.

:

In yesterday's spot lead market, the trading center of SHFE lead moved further downward. Suppliers quoted prices following the market trend. Quotations in the Jiangsu, Zhejiang, Shanghai region against the SHFE lead 2511 contract were at premiums of 0-80 yuan/mt. Medium and large lead-acid battery enterprises implemented concentrated production cuts or halts, leading to a significant weakening in lead consumption. Some downstream enterprises primarily relied on long-term contracts for procurement, with few inquiries for spot orders. Additionally, premiums for electrolytic lead cargoes self-picked up from the production site continued to be lowered. Quotations from mainstream producing areas against the SMM #1 lead price were at premiums of 30-100 yuan/mt ex-works. Secondary refined lead quotations against the SMM #1 lead price were at discounts of 100-0 yuan/mt ex-works.

Inventory: As of October 28, LME lead inventories decreased by 2,700 mt to 229,675 mt; SHFE lead ingot warrant inventories were 23,097 mt, an increase of 49 mt from the previous trading day.

Today's Lead Price Forecast:

Recently, medium and large lead-acid battery enterprises plan to implement concentrated production cuts or maintenance from late October to early November. Lead consumption is expected to weaken, becoming the main factor affecting lead prices. Trading activity in the spot lead market this week has already weakened significantly compared to last week. Lead smelters' reluctance to budge on prices when shipping goods has eased, and they have successively lowered premiums to sell goods. Meanwhile, the current spread between futures and spot prices is relatively wide, and some suppliers intend to ship to delivery warehouses. Additionally, the current social inventory of lead ingots is only 30,000 mt, and spot circulation of delivery brands in north China remains limited. With bullish and bearish factors intertwined in the market, lead prices may continue their fluctuating trend 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. These data are for reference only and do not constitute decision-making advice.