Fundamentals Remain Mediocre, Short-Term Lead Prices May Temporarily Enter Consolidation [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,008/mt. With a lack of market-moving news, LME lead fluctuated rangebound between $2,005/mt and $2,015/mt for an extended period. During the late-night session, the US dollar index strengthened, causing LME lead to fall below the $2,000/mt mark, hitting a low of $1,996/mt, and it finally closed at $1,998.5/mt, down 0.52%.

Overnight, the most-traded SHFE lead 2601 contract opened at 17,310 yuan/mt. With bullish and bearish factors in a stalemate, SHFE lead fluctuated rangebound, but its price center moved lower compared to the previous day. It finally closed at 17,320 yuan/mt, down 0.03%. Its open interest decreased by 70 lots from the previous trading day to 43,037 lots.

On the macro front:

The Political Bureau of the CPC Central Committee stated that next year's economic work should adhere to the principles of seeking progress while maintaining stability, improving quality and efficiency, and leveraging the integrated effects of existing policies and incremental policies. It will continue to implement a more proactive fiscal policy and a moderately easy monetary policy, strengthen counter-cyclical and cross-cyclical adjustments, implement more proactive and impactful macro policies, continuously expand domestic demand, optimize supply, improve incremental aspects, and revitalize existing assets. Separately, US former President Trump hinted in a post that the Supreme Court might overturn the "reciprocal tariff" but he has a "Plan B", and US companies are "scrambling" for "tax rebates".

:

In yesterday's lead spot market, available cargoes in the Jiangsu, Zhejiang, Shanghai market remained effective. Meanwhile, suppliers actively sold cargoes self-picked up from production site, with offered discounts widening to a discount of 120-50 yuan/mt against the SHFE lead 2601 contract for ex-factory delivery. Smelters' offers ranged from a discount of 50 yuan/mt to a premium of 50 yuan/mt against the SMM #1 lead average price for ex-factory delivery. While lead prices held up well, downstream enterprises only made just-in-time procurement or primarily purchased based on long-term contracts, resulting in sluggish trading in the spot order market.

Inventory: As of December 8, LME lead inventory decreased by 3,725 mt to 195,875 mt. The total SMM lead ingot social inventory across five regions fell to 20,500 mt, down 10,200 mt from December 1 and down 3,200 mt from December 4, hitting a fresh 15-month low again.

Today's Lead Price Forecast:

Currently, both primary lead and secondary lead smelters are undergoing maintenance or production cuts, leading to tight regional supply of lead ingots. Coupled with transportation distances and price advantages, some downstream enterprises' just-in-time procurement favors warehouse cargoes, causing a further decline in lead ingot social warehouse inventory. However, it is worth noting that in-factory inventory at primary lead smelters operating normally accumulated. As of last Thursday, the weekly in-factory lead ingot inventory at primary lead enterprises had risen above 10,000 mt. Subsequently, the decline in lead ingot social inventory may slow down, limiting the upside room for lead prices.

Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.