Raw Material Supply Coupled with Downstream Bargain Hunting, Lead Prices Find Strong Support Below [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened higher at $1,999/mt. During the Asian session, it fluctuated upward slightly above the daily moving average before briefly pulling back. Entering the European session, due to bulls increasing their positions, LME lead fluctuated considerably, touching a high of $2,010/mt. Towards the end of the session, it continued to weaken, falling to a low of $1,995/mt, and finally closed at $1,998.5/mt, up $5/mt or 0.25%. A small bearish candlestick was recorded.

Overnight, the most-traded SHFE lead 2601 contract opened at 17,240 yuan/mt. At the beginning of the session, due to bulls reducing positions, it plummeted straight to 17,120 yuan/mt, then found support at the 10-day moving average. SHFE lead saw a slight compensatory rise and moved sideways towards the end of the session, finally closing at 17,135 yuan/mt, down 50 yuan/mt or 0.44%. It formed a small bearish candlestick with a flat top.

On the Macro Front:

US ADP employment fell by 32,000 in November, the lowest level since March 2023, while market expectations were for an increase of 10,000. According to Politico, the Trump administration is considering an executive order on robots next year, going "all out" to accelerate the development of the industry. US media: US Treasury Secretary Besant may also serve as the Director of the National Economic Council. The most-traded SHFE copper contract broke through the 90,000 yuan/mt mark, currently up over 1%, hitting a record high. China's Ministry of Finance will issue 7 billion yuan in government bonds in Hong Kong in December.

:

Lead ingot supply in the Shanghai market was limited, with some suppliers having no spot cargo available for sale for a short time, thus suspending quotations. Currently, cargoes self-picked up from primary lead production sites are relatively ample, and suppliers' willingness to sell was moderate. Mainstream quotations against the SMM #1 lead average price remained at premiums of 0-50 yuan/mt ex-works. Secondary refined lead suppliers' willingness to sell changed relatively little, and spot order quotations remained firm. Mainstream tax-included ex-works quotations were at discounts of 50-0 yuan/mt against the SMM #1 lead average price. As lead prices stopped falling and rebounded, downstream battery producers' purchasing enthusiasm improved.

Inventory: On December 3, LME lead inventory decreased by 3,800 mt to 253,150 mt. As of December 1, the total social inventory of lead ingots across five regions tracked by SMM fell to 30,700 mt, down 6,300 mt from November 24 and down 4,300 mt from November 27, dropping to a near one-month low.

Today's Lead Price Forecast:

Raw material side, as the supply gap for lead concentrates persists, TCs negotiations are deadlocked. Meanwhile, prices in the waste lead-acid battery market showed signs of rebounding due to a decline in recycling volume, indicating strong cost support currently. Supply side, maintenance and production halts continue at primary lead and secondary lead smelters, and production in December is expected to decline. Consumer side, downstream battery producers' enthusiasm for purchasing lead ingots has increased due to fears of future price hikes. Currently, there are many favorable factors for lead prices, but attention must still be paid to the appreciation of the renminbi and the potential opening of import windows after lead prices rebound, which could lead to an inflow of overseas lead ingots into the domestic market, thereby suppressing the rise in lead prices.

Data Source Statement: Except for publicly available information, 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.