Lead Market Sees Dual Decline in Supply and Demand with Weakening Prices, Subsequent Focus on Cost Support of Secondary Refined Lead [SMM Lead Morning Meeting Minutes]

Futures:

On Friday night, LME lead opened at $2,004.5/mt. After opening, it fluctuated downward, and during the European session, it consolidated under pressure below the daily moving average. Before closing, it declined again, falling below the $1,900/mt level to a low of $1,980/mt, down $16/mt or 0.80%. On Friday night, the most-traded SHFE lead contract opened at 17,195 yuan/mt. After briefly touching a high of 17,230 yuan/mt at the beginning of the session, it fluctuated downward to a low of 17,115 yuan/mt. After a brief consolidation, it rebounded and finally closed at 17,135 yuan/mt, down 65 yuan/mt or 0.38%.

On the macro front: On Friday, despite dovish remarks from the US Fed boosting expectations for a December interest rate cut, with market bets on a Fed rate cut in December surpassing 50% after the comments, the US dollar index remained firm, while US Treasury yields fell across the board. Data released by the National Energy Administration showed that in October, total electricity consumption in society reached 857.2 billion kWh, up 10.4% YoY. This growth rate set a new high for monthly electricity consumption growth this year. Electricity consumption by the secondary industry was 568.8 billion kWh, up 6.2% YoY, with industrial electricity consumption increasing 6.4% YoY, and high-tech and equipment manufacturing performing notably well.

Spot fundamentals:

In the Shanghai market, Chihong and Honglu lead were quoted at parity against the SHFE lead 2512 contract. Lead prices continued their weak and fluctuating trend, leading suppliers to lower their quoted premiums. Meanwhile, the discounts for primary lead cargoes self-picked up from the production site narrowed (against the SHFE lead 2512 contract). Quotations from mainstream producing areas were at premiums of 20-200 yuan/mt against the SMM #1 lead average price ex-works. However, as lead prices fell, downstream enterprises' wait-and-see sentiment intensified, and spot market transactions turned sluggish.

Inventory: On November 21, LME inventory decreased by 1,800 mt to 262,850 mt. According to SMM, as of November 20, the total social inventory of lead ingots across five regions stood at 37,700 mt, up 2,800 mt from November 13 but down nearly 900 mt from November 17.

Today's lead price forecast:

Approaching the end of November, in terms of supply, primary lead and secondary lead smelters saw mixed production changes, with regional supply tightening. Meanwhile, the peak season for the lead-acid battery market is nearing its end, demand is weakening, and purchasing sentiment among downstream enterprises is divided. After the lead price decline, some downstream enterprises made purchases based on demand, but many battery companies remained cautious and adopted a wait-and-see stance due to the price drop, limiting lead ingot destocking. The supply-demand dynamic is currently at a stalemate. Lead prices are expected to continue their weak and fluctuating trend this week. Secondary refined lead quotations may remain firm, with cost support for secondary lead garnering renewed widespread attention.