Lead Prices Erase Nearly a Month's Gains; Follow-up Focus on Downstream Purchase Trends [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,039/mt. The US dollar index continued to strengthen, base metals generally weakened, and LME lead extended its stepwise decline. Although the decline in LME lead temporarily paused and a pullback occurred due to a drop in LME lead inventory during the session, this did not continue into the night session. Instead, dragged down by the decline in SHFE lead, LME lead fell again, hitting a low of $2,022/mt, and finally closed at $2,027/mt, down 0.56%, marking a four-day losing streak.

Overnight, the most-traded SHFE lead 2601 contract opened at 17,225 yuan/mt. After the lead price fell, downstream enterprises showed low buying interest, and lead ingot destocking was not yet significant. SHFE lead continued its weak and fluctuating trend, hitting a low of 17,190 yuan/mt during the session, and finally closed at 17,195 yuan/mt, down 0.49%. Its open interest stood at 66,869 lots, a decrease of 2,257 lots from the previous trading day. With lead prices falling continuously recently, attention should be paid to the support effectiveness of the 60-day moving average below.

On the macro front:

US initial jobless claims for the week ending October 18 were 232,000, the first release since the ongoing absence of official reports due to the government shutdown. The "small non-farm payrolls" ADP weekly employment data showed that US private sector employment averaged a weekly decrease of 2,500 people over the four weeks ending November 1. Separately, Trump claimed he had selected a candidate for Fed Chairman, and the US Treasury Secretary said the candidates had been narrowed down to five, including current Fed Governors Waller and Bowman, former Governor Warsh, White House economic adviser Hassett, and BlackRock executive Reed.

:

In the lead spot market yesterday, as the decline in SHFE lead widened, suppliers quoted prices accordingly, with some maintaining small premium quotations. Quotations in the Jiangsu, Zhejiang, Shanghai area against the SHFE lead 2512 contract were at premiums of 0-50 yuan/mt. During this period, the discount for primary lead smelter's cargoes self-picked up from production site (against the SHFE lead 2512 contract) narrowed again. Downstream enterprises showed improved inquiry activity, with some purchasing as needed at low prices, preferring cargoes self-picked up from production site. Trading activity in the spot market improved, with moderate transactions in the north and east China areas, while transactions in the south China area were average.

Inventory: As of November 18, LME lead ingot inventory decreased by 1,325 mt to 264,800 mt; SHFE lead ingot warrant inventory was 32,690 mt, a decrease of 275 mt from the previous trading day.

Today's lead price forecast:

Recently, lead prices have fallen successively, with SHFE lead having erased all gains since late October. Although there are no clear signs of the decline stopping yet, the pace of decline has relatively slowed down. On the fundamentals side, maintenance and resumption coexist in primary lead smelters, secondary lead enterprise profits are further squeezed, the price spread between primary lead and secondary lead narrows, while supply-side production cuts and transportation restrictions persist in the north China area. Subsequent attention should be paid to downstream enterprises' buying the dip after the lead price falls. If lead ingot destocking can be achieved, lead prices are expected to stop falling and rebound.

Data Source Statement: Except for publicly available information, all 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.