Domestic Lead Ingot Destocking Provides Short-Term Support Conditions for Lead Price Movement [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,025/mt. During the Asian session, LME lead was locked in a stalemate between bulls and bears, consolidating mostly within the range of $2,020-2,025/mt. Entering the European session, the decline in LME lead accelerated, especially after the release of the US Fed meeting minutes, which lowered market expectations for a December interest rate cut. The US dollar index broke through the 100 mark, and LME lead fell further, hitting a low of $2,013/mt during the session, before finally closing at $2,014.5/mt, down 0.62%, marking five consecutive days of declines. Subsequent attention will focus on the effectiveness of support at the 60-day moving average.

Overnight, lead warrant inventories declined. The most-traded SHFE lead 2601 contract opened at 17,300 yuan/mt, reversing the recent consecutive downward trend. However, with limited fundamental support and dragged down by the decline in LME lead, SHFE lead fluctuated and pulled back, trading around 17,250 yuan/mt before finally closing at 17,230 yuan/mt, up 0.09%. Its open interest decreased by 1,449 lots to 62,446 lots compared to the previous trading day.

On the macro front:

The US Fed meeting minutes revealed significant disagreements: several members believed a December rate cut was inappropriate, while some expressed concerns about a disorderly decline in the stock market. The US October non-farm payrolls data was not released, and the November report is unexpectedly scheduled for release after the Fed's December meeting. Investors perceive a reduced likelihood of a Fed rate cut in December, as the delay in official data could lead to greater divergence among policymakers regarding the outlook.

:

In the lead spot market yesterday, SHFE lead continued to be in the doldrums, but the pace of decline slowed compared to the previous day. Suppliers sold goods following the market trend, with quoted premiums and discounts basically flat. Quotations in the Jiangsu, Zhejiang, and Shanghai region against the SHFE lead 2512 contract were at premiums of 0-50 yuan/mt. Additionally, primary lead smelters generally had low inventories, and reluctance to sell at low prices increased, leading to a reduction in spot order sales. Traders, however, actively sold goods, with some intending to expand discounts for transactions (against the SHFE lead 2512 contract). Furthermore, secondary lead enterprises saw shrinking profits and mostly held prices firm for sales. Quotations for secondary refined lead against the SMM #1 lead average price were at discounts of 50-0 yuan/mt ex-works. Downstream enterprises bought the dip as needed, showing a preference for the primary lead sector.

Inventory: As of November 18, LME lead ingot inventories decreased by 325 mt to 264,475 mt; SHFE lead ingot warrant inventories stood at 31,206 mt, down 1,484 mt from the previous trading day.

Today's lead price forecast:

Recently, production cuts and resumptions coexisted among domestic primary lead and secondary lead enterprises. Regional supply of lead ingots tightened, especially after the decline in lead prices, which narrowed profits for secondary lead. Some smelters' production enthusiasm decreased. The price spread between primary lead and secondary lead remained at a relatively narrow level, consistent with primary lead prices in some regions, leading downstream enterprises to prefer purchasing from the primary lead sector. This prompted a drawdown in lead ingot warehouse inventories, providing supportive conditions for lead price movements.

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.