Lead Market Sees Dual Growth in Supply and Demand with Limited Increase in Social Inventory, Moderate Support Under Lead Prices [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,019.5/mt, initially dipped to test a low of $2,015/mt before rebounding and stabilizing above the $2,200/mt level. During the European session, it first declined then rose, touching a high of $2,039/mt before the close. After minor consolidation, it finally settled at $2,036.5/mt, up $17/mt, a gain of 0.84%.

Overnight, the most-traded SHFE lead contract opened at 17,420 yuan/mt, initially dipped to a low of 17,370 yuan/mt before edging up to a high of 17,430 yuan/mt. It then fluctuated rangebound above the 17,400 yuan/mt level, finally settling at 17,405 yuan/mt, down 40 yuan/mt, a loss of 0.23%.

The US labour market showed significant cooling. According to a report from private data provider Revelio Labs, US non-farm payrolls in October decreased by 9,100, far worse than the previous increase of 33,000. Meanwhile, the October Challenger job cuts surged to 153,100, soaring 175.3% YoY, hitting the highest level for the same period since 2003. The weak employment data strengthened market expectations for a US Fed pivot. On November 6, China's Ministry of Finance issued $4 billion in sovereign bonds for the first time, with the three-year bond coupon rate set at 3.625%, on par with the yield on US Treasuries of the same maturity. This marked the first time in history that Chinese and US "borrowing rates" were equalized.

Spot Fundamentals:

In the Shanghai market, Chihong lead was quoted at premiums of 0-50 yuan/mt against the SHFE lead 2512 contract. Recently, SHFE lead maintained a fluctuating trend, erasing all of the previous day's gains. Suppliers showed little variation in warrant quotations, while quotations for primary lead cargoes self-picked up from the production site were noticeably firmer. Supply in Hunan was limited, pushing quoted premiums higher (against the SMM #1 lead average price). Downstream enterprises purchased as needed. Meanwhile, secondary lead quotations were stable, with secondary refined lead quoted at discounts of 100-0 yuan/mt against the SMM #1 lead average price ex-works.

Inventory: As of November 5, LME lead inventory decreased by 3,100 to 205,500 mt. As of November 6, the total social inventory of lead ingots across five regions tracked by SMM reached 31,800 mt, up 1,900 mt from October 30 and up 1,600 mt from November 3.

Today's Lead Price Forecast:

Some downstream enterprises resumed production after maintenance ended in late October, leading to a recovery in demand for primary lead. Smelters in Hunan accelerated shipments, significantly reducing inventory. Air quality control measures were reinstated in the northern regions, leading to longer lead ingot transportation cycles in Henan due to restrictions on the entry of National V and below standard vehicles into plants. Scrap battery supply increased relatively in the Jiangsu-Zhejiang region. Recently, secondary lead smelters resumed production one after another. As supply gradually increased, downstream enterprises had more purchasing options. Next week is the week before the delivery of the SHFE lead 2511 contract. Some suppliers have started transferring lead ingots for delivery to social warehouses, and it is expected that more deliverable lead ingots will flow into warehouses. However, the production of newly added lead ingots available for delivery is limited, and the growth rate of social inventory may slow down. Support below lead prices remains moderate.