Lead Futures Stop Falling and Rebound, Spot Market Trading Turns Quiet During Year-End Period [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,965.5/mt, fluctuated upward during the Asian session. Entering the European session, it initially fell then rose, touching a high of $1,990/mt, dropped back slightly before closing, and finally settled at $1,984.5/mt, up $24.5/mt, a gain of 1.25%.

Overnight, the most-traded SHFE lead contract opened at 16,970 yuan/mt, touched a high of 17,030 yuan/mt at the beginning of the session before fluctuating downward, explored a low of 16,890 yuan/mt then rebounded to make up gains, consolidated around the 17,000 yuan/mt level, and finally settled at 17,005 yuan/mt, up 155 yuan/mt, a gain of 0.92%.

On the macro front, the Bank of Japan raised interest rates by 25 basis points, lifting the short-term policy rate to 0.75%, in line with market expectations, with the decision approved unanimously. The BOJ expects real interest rates to remain at extremely low levels; if economic and price trends align with expectations, and as the economy and prices improve, it will continue to raise policy rates. Regarding the US Fed's interest rate cut views, US White House National Economic Council Director Hassett stated alignment with Goolsbee's view, indicating there is still ample room for interest rate cuts. Meanwhile, Fed's Harker prefers keeping rates stable until spring and hinted that the neutral rate is higher than commonly perceived. Premier Li Qiang of the State Council presided over an executive meeting of the State Council, making arrangements for implementing the decisions and deployments of the Central Economic Work Conference.

Spot Fundamentals:

In the Shanghai region, south China lead was offered at a premium of 50-70 yuan/mt against the SHFE lead 2601 contract; in the Jiangsu-Zhejiang region, JCC lead was offered at a premium of 30-50 yuan/mt against the SHFE lead 2601 contract. SHFE lead explored lows then rebounded, suppliers sold goods following the market trend, and as it is the year-end period, most suppliers actively cleared inventory this week, leaving limited circulating cargoes available. Additionally, inventories of primary lead cargoes self-picked up from production sites also decreased significantly, with some offers turning to a discount (against the SHFE lead 2601 contract). Most downstream enterprises had already stockpiled when prices were low, resulting in weaker inquiry enthusiasm today, with only a few purchasing as needed.

Inventory side: On December 20, LME lead inventory decreased by 3,500 mt to 258,625 mt. As of December 18, the total social inventory of lead ingots across five regions tracked by SMM stood at 20,500 mt, basically unchanged from December 11 but down 1,400 mt from December 15.

Today's Lead Price Forecast:

Supply side sees both increases and decreases; primary lead enterprises resumed after maintenance, while secondary lead smelters cut production due to factors like raw materials and environmental protection. Meanwhile, as the year-end approaches, some upstream and downstream enterprises are closing their books for the year, and spot market trading activity is expected to gradually decline. Social inventories of lead ingots are at a 15-month low, and smelter inventories are also at low levels, providing strong support below lead prices. Lead prices stopped falling and rebounded, breaking through the 17,000 mark. However, it remains necessary to monitor whether pre-holiday stockpiling by downstream battery enterprises will temporarily boost consumption demand.