Macro Tailwinds VS. Fundamentals: Short-Term Lead Prices May Struggle to Break Consolidation Trend [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,023/mt. After opening, it continued its recent trend of holding up well, with the overall trading center moving higher, reaching an intraday high of $2,034.5/mt. During the late session, the US dollar index surged following the US Fed's anticipated interest rate cut, causing LME lead to retreat and erase most of its gains. It finally closed at $2,019/mt, down 0.3%, ending an eight-day winning streak.

Overnight, the most-traded SHFE lead 2512 contract opened at 17,360 yuan/mt. With domestic fundamentals intertwined with bullish and bearish factors, SHFE lead showed a narrow consolidation trend after opening, fluctuating mostly between 17,350 and 17,400 yuan/mt, and finally formed a doji. Its open interest decreased by 1,303 lots to 72,215 lots compared to the previous trading day.

On the Macro Front:

China's Foreign Ministry spokesperson announced on October 29: As agreed by China and the US, President Xi Jinping will meet with US President Trump in Busan, South Korea, on October 30, local time, to exchange views on China-US relations and issues of mutual interest. The US Fed's October meeting announced a continued 25-basis-point interest rate cut and the end of balance sheet reduction in December, with two committee members dissenting from the rate decision. Powell: Another rate cut in December is not a done deal, the committee is deeply divided, the job market is still cooling, and there is short-term upward pressure on inflation.

:

In the lead spot market yesterday, SHFE lead continued its weak trend, and due to the limited availability of spot circulating cargoes, quotations were also scarce. Quotations in the Jiangsu, Zhejiang, and Shanghai region against the SHFE lead 2511 contract were at premiums of 0-50 yuan/mt. Meanwhile, quotations for primary lead smelter cargoes self-picked up from production sites increased relatively and further lowered their quoted premiums. Main producing area quotations against SMM #1 lead were at premiums of 0-100 yuan/mt ex-works, while secondary refined lead quotations against the SMM #1 lead price were at discounts of 100-0 yuan/mt ex-works. Downstream enterprises maintained a wait-and-see attitude with cautious procurement, with some companies mainly purchasing via long-term contracts. Spot order market transactions showed no significant improvement for the time being.

Inventory: As of October 29, LME lead inventory decreased by 4,800 mt to 224,875 mt; SHFE lead ingot warrant inventory was 22,997 mt, down 100 mt from the previous trading day.

Today's Lead Price Forecast:

Recently, the continuous destocking of LME lead inventory in overseas markets has driven LME lead prices higher. Domestically, however, concentrated production cuts and suspensions by medium and large downstream enterprises have weakened lead consumption in the short term, causing a divergence in the price trends of domestic and international lead, and gradually narrowing the import window for lead ingots. At the same time, domestic lead ingot inventory remains at low levels, while primary lead and secondary lead enterprises are expected to resume production after maintenance in November, further increasing the demand for raw materials such as lead concentrates and scrap. Raw material cost factors have become one of the important elements supporting lead prices. In the short term, bullish and bearish factors in the market continue to contend, and lead prices are expected to remain 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, and are for reference only, not constituting decision-making advice.