Fundamentals Provide Limited Support, Lead Prices May Remain in the Doldrums [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,020/mt. Pressured by high lead ingot inventories and a strong US dollar index, it fluctuated in the doldrums for most of the day, consolidating between $2,010/mt and $2,020/mt. The decline accelerated towards the close, nearly breaching the $2,000 mark, with the intraday low touching $2,005/mt. It finally settled at $2,005/mt, down 0.47%, marking the sixth consecutive negative session. Market participants will monitor the support effectiveness at the $2,000 psychological level.

Overnight, the most-traded SHFE lead 2601 contract opened at 17,250 yuan/mt. After opening, SHFE lead fluctuated downward, moving from 17,250 yuan/mt to 17,200 yuan/mt, and finally settled at 17,210 yuan/mt, down 0.2%. Its open interest reached 60,110 lots, a decrease of 175 lots from the previous trading day.

On the Macro Front:

China's LPR remained unchanged for the sixth consecutive month: the November 5-year and over LPR was 3.5%, and the 1-year LPR was 3%. US non-farm payrolls increased by 119,000 in September, significantly exceeding expectations, while job numbers for the previous two months were revised down by 33,000. The unemployment rate unexpectedly rose to 4.4%, hitting a four-year high. The "New Fed News Agency" reported that the September jobs report did not help resolve internal Fed disagreements. US initial jobless claims fell more than expected to 220,000 last week, while continuing claims hit a four-year high.

:

In the lead spot market yesterday, SHFE lead stopped falling and rebounded relatively. Suppliers quoted prices following the market trend. Quotations in the Jiangsu, Zhejiang, Shanghai region against the SHFE lead 2512 contract were at premiums of 0-50 yuan/mt. Meanwhile, primary lead smelter ex-works quotations showed disparities. Main producing region quotations were at premiums of 0-200 yuan/mt against the SMM #1 lead average price ex-works, with higher premiums attributed to smelters holding prices firm due to limited availability. Additionally, secondary refined lead quotations maintained discounts of 50-0 yuan/mt against the SMM #1 lead average price ex-works. Downstream enterprises made just-in-time procurement, with some relying primarily on long-term contracts. Spot market transactions were mixed.

Inventory: As of November 18, LME lead ingot inventory increased by 175 mt to 264,650 mt. The total SMM lead ingot social inventory across five regions reached 37,700 mt, an increase of 2,800 mt from November 13, but a decrease of nearly 900 mt from November 17.

Today's Lead Price Forecast:

Social inventories of lead ingots increased first and then decreased this week. The main reasons were that lead ingots re-entered the circulation market after the front-month contract delivery concluded, coupled with falling lead prices, which prompted some downstream enterprises to purchase according to demand. Concurrently, primary lead and secondary lead enterprises in regions such as Anhui, Jiangxi, and Jiangsu implemented production cuts and maintenance. Vehicle restrictions due to air quality control in North China persisted, leading to regionally tighter supply. However, the demand for lead-acid batteries is mixed, with most producers operating based on sales, providing limited support for lead prices.

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