Short-term lead prices are expected to consolidate, with attention on subsequent visible inventory changes [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,987.5/mt. The overall US dollar operating center shifted downward, and base metals generally strengthened. At the beginning of the session, LME lead showed strong performance and attempted to return to $2,000/mt but failed. It then fluctuated mostly between $1,980-1,990/mt for most of the subsequent time, until finally closing at $1,983.5/mt, down 0.05%.

Overnight, the most-traded SHFE lead 2601 contract opened at 17,115 yuan/mt. It attempted to stand above 17,200 yuan/mt at the beginning of the session but failed. With limited fundamental support and a slowdown in inventory decline, SHFE lead showed a consolidation trend, finally closing at 17,120 yuan/mt, down 0.17%. Its open interest reached 34,283 lots, a decrease of 1,471 lots compared to the previous trading day. Additionally, the SHFE lead 2601 contract is gradually rolling over; attention is on the most-traded contract switching to the 2602 contract.

On the Macro Front:

The Central Economic Work Conference was held in Beijing, and Xi Jinping delivered an important speech. The meeting pointed out that it will continue to implement a moderately loose monetary policy, flexibly and efficiently use various policy tools such as RRR cuts and interest rate cuts, focus on stabilizing the real estate market, actively and orderly resolve local government debt risks, deeply implement special actions to boost consumption, and remove unreasonable restrictions in the consumption sector. Additionally, the number of initial jobless claims in the US increased by 44,000 last week, the largest increase since 2020, while continuing claims fell sharply to an eight-month low. The US Fed's hawkish stance is insufficient, and rate cut trades are making a comeback. Morgan Stanley and Citigroup both expect another rate cut in January. When the Fed "cuts interest rates alone," while other central banks even start raising rates, US dollar depreciation will become a focus in 2026.

:

In the lead spot market yesterday, SHFE lead stopped falling and rebounded. Suppliers' willingness to sell improved, but circulating cargoes in Jiangsu, Zhejiang, and Shanghai were limited, with few quotations. Additionally, quotations for primary lead cargoes self-picked up from production sites decreased in some regions, while some other regions expanded discounts (against the SHFE lead 2601 contract) for sales. Quotations from mainstream producing areas against the SMM #1 lead price were at premiums of 0-30 yuan/mt. Meanwhile, downstream enterprises' risk aversion sentiment eased, and they gradually purchased as needed. Spot market transactions showed regional improvement.

Inventory: As of December 11, LME lead inventory decreased by 75 mt to 235,475 mt. The total social inventory of lead ingots in five regions according to SMM reached 20,500 mt, a decrease of 3,200 mt compared to December 4, and was basically flat compared to December 8.

Today's Lead Price Forecast:

Recently, production at primary lead and secondary lead enterprises showed no significant changes. In the first half of the week, due to the sudden drop in lead prices, downstream enterprises generally adopted a wait-and-see attitude, and the decline in lead ingot inventory slowed down. Next week, maintenance at primary lead enterprises in east China is expected to conclude, with supply gradually recovering. At the same time, as the delivery date for the SHFE lead 2512 contract approaches, there may be some small-scale inventory transfers for delivery. In December, SHFE lead prices moved largely in sync with spot lead, with a relatively small spread between futures and spot prices. Suppliers showed moderate enthusiasm for delivery, and the volume of lead ingot deliveries this round is projected to decline compared to November. In the short term, lead prices are expected to remain range-bound, with attention on subsequent changes in visible inventory.

Data Source Statement: Data not derived from public information 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.