Lead Prices Continue in the Doldrums, Supply-Demand and Trading Activity Both Decline in the Domestic Market [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,981/mt. During the Asian session, it moved sideways around the daily moving average. Entering the European session, it continued its sideways consolidation trend, touching a high of $1,989/mt during the period. Subsequently, it fluctuated downward all the way, probing a low of $1,973.5/mt, and finally closed at this level, down $8/mt, a decrease of 0.40%.

Overnight, the most-traded SHFE lead contract opened at 17,060 yuan/mt. After opening, it was under pressure and moved in a narrow range sideways below the daily moving average. Subsequently, dragged down by the weakening LME lead, it lost the support level of the 17,000 yuan/mt line, finally closing at 16,845 yuan/mt, down 225 yuan/mt, a decrease of 1.32%.

On the macro front, the US Fed released the Beige Book showing economic activity was basically flat. Weak consumer spending and diminishing momentum in the job market further strengthened market expectations for a Fed interest rate cut in December. Currently, the Russia-Ukraine war remains deadlocked, and the four-party game involving Russia, Ukraine, the US, and Europe is expected to continue. Issues such as territorial division, whether Ukraine can join the EU and NATO, and security guarantees for Ukraine have been shelved. The People's Bank of China and the State Administration for Market Regulation jointly issued the "Implementation Plan on Enhancing the Supply-Demand Adaptability of Consumer Goods to Further Promote Consumption." By 2027, the supply structure of consumer goods is expected to be significantly optimized, forming three trillion-yuan level consumption sectors and ten hundred-billion-yuan level consumption hot topics, and creating a batch of high-quality consumer goods rich in cultural connotation and renowned globally; by 2030, a high-quality development pattern characterized by positive interaction and mutual promotion between supply and consumption is expected to be basically formed, with the contribution rate of consumption to economic growth steadily increasing.

Spot Fundamentals:

In the Shanghai market, Chihong Zn & Ge lead was quoted at a premium of 0-50 yuan/mt against the SHFE lead 2512 contract. SHFE lead continued its weak, fluctuating trend. Suppliers quoted prices following the market, with limited warrant offers. Quotes for primary lead cargoes self-picked up from production sites were chaotic, with Hunan offers relatively firm. Downstream enterprises purchased as needed, with some intending to buy the dip, but many adopted a wait-and-see approach. Transactions in the spot order market were still dominated by rigid demand.

Inventory: On November 26, LME inventory increased by 400 mt to 264,975 mt. According to SMM, as of November 24, the total social inventory of lead ingots in five regions tracked by SMM fell to 37,000 mt, down 1,500 mt from November 17 and down nearly 700 mt from November 20.

Today's Lead Price Forecast:

Lead prices stopped falling and stabilized in the short term, but consumption in the end-user EV and automotive sectors remained sluggish, leaving the rebound momentum for lead prices somewhat insufficient. Differences in refined lead supply across regions persisted, with tight circulation of spot cargoes in some local markets. Profits for secondary refined lead declined, and individual secondary refined lead smelters were slightly hesitant in resuming delayed production plans. Suppliers of secondary refined lead maintained firm prices and were reluctant to sell, while downstream rigid demand still primarily focused on primary lead. Lead prices continued to be in the doldrums, with most downstream buyers hesitant to purchase due to concerns over price declines. Subsequent attention should still be paid to the cost support below lead prices.