Refined Lead Supply Partially Recovers, Lead Prices Under Pressure [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,028/mt. During the Asian session, it fluctuated downward. Entering the European session, the decline continued, touching a low of $2,016.5/mt before fluctuating upward to reach a high of $2,032.5/mt. It pulled back and adjusted before the close, finally settling at $2,021/mt, down $9/mt or 0.44%. Overnight, the most-traded SHFE lead contract opened at 17,425 yuan/mt. At the beginning of the session, it fluctuated upward to a high of 17,585 yuan/mt before weakening and falling below the daily average line. After being under pressure around 17,500 yuan/mt and briefly consolidating, it weakened again, exploring a low of 17,425 yuan/mt, and finally settled at 17,435 yuan/mt, down 10 yuan/mt or 0.06%, forming a small bullish candlestick with a long upper shadow.

US September job openings remained at low levels. Although the number of job vacancies rebounded, it was still far below the peak of 7.769 million seen in May this year, indicating that while tightness in the labor market has fluctuated, the overall cooling trend remains unchanged. US stocks fell sharply on Tuesday, as cautious comments from major bank executives raised investor concerns about high valuation risks. Domestically, the central bank restarted treasury bond buying and selling operations. The People's Bank of China resumed open market treasury bond buying and selling operations in October, achieving a net injection of 20 billion yuan that month.

Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted at premiums of 0-50 yuan/mt against the SHFE lead 2512 contract. The operating center of SHFE lead shifted slightly upward. However, with limited availability of warrant cargoes in circulation, suppliers' quoted premiums and discounts showed little significant change. Additionally, supply increased as secondary lead enterprises resumed production, leading to more quotations. Secondary refined lead from major production areas was quoted at discounts of 50-0 yuan/mt against the SMM #1 lead average price, ex-factory. The supply of primary lead cargoes for self-pickup from production sites showed regional differences; discounts in some producing areas widened compared to the previous day (against the SHFE lead 2512 contract), while others held prices firm for sales. Downstream enterprises made purchases as needed, buying the dip, and transactions for some cargoes with large discounts improved slightly.

Inventory: As of November 4, LME lead inventory decreased by 4,275 mt to 212,525 mt. As of November 3, the total social inventory of lead ingots across five regions surveyed by SMM reached 30,200 mt, a decrease of nearly 200 mt from October 27 and an increase of over 300 mt from October 30.

Today's Lead Price Forecast:

Affected by smog weather in the north, transportation for some National V standard vehicles is restricted. However, according to smelters, no significant impact has been observed in the short term. Maintenance and production resumptions occur simultaneously at primary and secondary lead enterprises, resulting in significant regional disparities in refined lead supply. As the circulation of secondary refined lead cargoes increases, some suppliers expanded discounts to sell. In contrast, some primary lead smelters in specific regions were reluctant to sell at premiums after their inventories were sold out. With the expectation of production resumptions at domestic smelters being realized, social inventories of lead ingots may still have room to accumulate. In the short term, lead prices are expected to remain under pressure.