Recently, the supply of lead in the market is far from abundant, and lead prices may continue to hold up well before the New Year's Day holiday. [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead was closed for the Christmas holiday. Overnight, the most-traded SHFE lead contract opened at 17,315 yuan/mt, dipped to an intraday low of 17,185 yuan/mt in early trading, then rose to test the 17,300 yuan/mt level, before declining and consolidating above the daily moving average, finally closing at 17,265 yuan/mt, up 0 yuan/mt, a gain of 0.0%.

On the macro front: On December 25, the offshore yuan broke through the 7.0 mark against the US dollar, hitting a high of 6.9965, the first time since September 2024. On December 25, the US government announced it would impose additional tariffs on Chinese chips in 2027, concluding the trade investigation into Chinese chips initiated by the previous Biden administration. In December, the central bank conducted an excess rollover of MLF and outright reverse repo operations, releasing 300 billion yuan in medium and long-term liquidity; the net injection for the full year through these two tools totaled 4,961 billion yuan. US media analysis suggested that although the US government claimed China's practices in the chip industry "harm US interests," the final decision was to not impose additional tariffs on Chinese chips for at least 18 months.

Spot fundamentals:

Spot cargo availability was limited in Jiangsu, Zhejiang, and Shanghai, with few suppliers offering quotations, and some suspending quotes due to lack of cargo. Meanwhile, cargoes self-picked up from primary lead smelters relatively increased, particularly in south China where discounts emerged. Quotations from mainstream production areas were at discounts of 30 yuan/mt to premiums of 50 yuan/mt against the SMM #1 lead average price ex-works. However, downstream enterprises were closing their books at year-end, resulting in sluggish procurement demand and thin trading in the spot market.

Inventory: On December 25, LME inventory data was not released due to the Christmas holiday. As of December 25, SMM lead ingot social inventory across five regions showed a declining trend.

Today's lead price forecast:

Mid-week, large and medium-sized downstream enterprises successively entered year-end book-closing and inventory counting, reducing or suspending lead ingot procurement. Lead ingots required for production were mainly sourced from long-term contracts and previously booked cargoes. Approaching the year-end, trading activity in the spot lead market significantly declined. Most suppliers had little cargo left to sell this week, with only a few continuing to clear inventory, leading to relatively limited spot market availability and a subsequent decrease in social warehouse inventory. After the New Year's Day holiday, new monthly long-term contracts for 2026 are expected to commence, and downstream enterprises are expected to resume normal procurement, with social warehouse inventory likely to remain low. Precious metal prices rose sharply this week, continuing to boost the non-ferrous metals sector. Lead prices are expected to continue holding up well in this atmosphere before the New Year's Day holiday.