After Funds Withdraw, Lead Prices Will Fluctuate Around Fundamentals [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,055/mt. As funds flowed out of the nonferrous metals sector, LME lead fluctuated downward throughout the day, trading around $2,030/mt during the Asian session. During the European session, LME lead inventory continued to decline, and LME lead attempted to climb back above $2,050/mt but failed. The decline accelerated towards the end of the session, with the price hitting a low of $2,016.5/mt and eventually closing at that level, down 2.04%.

Overnight, the most-traded SHFE lead 2602 contract opened at 17,350 yuan/mt. After opening, SHFE lead traded in the doldrums, consolidating mostly between 17,250-17,300 yuan/mt. It finally closed at 17,290 yuan/mt, down 1.13%. Its open interest fell to 44,724 lots, a decrease of 1,304 lots from the previous trading day. Funds were gradually exiting SHFE lead, possibly rolling over to the SHFE lead 2603 contract. The shift of the most-traded contract warrants attention.

On the Macro Front:

US Trump: Expressed hope to visit Venezuela in the future, stated the US would "manage" Venezuela and exploit its oil reserves for many years; The US Senate passed a procedural vote on a resolution seeking to limit Trump's ability to use further military force against Venezuela. Trump: The US must "own" all of Greenland; Media reported that US officials held talks with Denmark on Thursday in an attempt to cool down the rhetoric about "taking over" Greenland. Besant: The US Fed should not delay interest rate cuts; The US will lift sanctions on some Venezuelan entities; Trump is expected to decide on the Fed Chairman candidate in January; Trump indicated he has already made a decision regarding the candidate. US Fed Governor Milan: Expected about 150 basis points of interest rate cuts in 2026, stated interest rates are "significantly above the neutral level." 1,000 enterprises "besieged" the White House: Demanding the refund of $100 billion in tariffs; The Supreme Court may issue a ruling this Friday that could be decisive; Besant said even an unfavorable ruling would not affect tariff revenue.

:

In the lead spot market yesterday, SHFE lead reversed its previous strength, giving back all gains. The trading center of SHFE lead shifted downward. Suppliers quoted prices following the market trend, but warehouse supply was limited, resulting in few offers. Meanwhile, cargoes self-picked up from primary lead smelters' production sites were ample, and suppliers actively offered to sell. Quotations from mainstream producing areas against the SMM #1 lead average price were at discounts of 30 yuan/mt to premiums of 30 yuan/mt, with premiums of 100-150 yuan/mt in a few regions. Additionally, secondary lead smelters actively offered to sell, with some holding prices firm due to limited supply. Quotations for secondary refined lead against the SMM #1 lead average price were at discounts of 300-0 yuan/mt ex-works. Downstream enterprises primarily relied on long-term contract purchases or temporarily used existing inventory, adopting a cautious wait-and-see approach towards spot orders.

Inventory: As of January 8, LME lead inventory decreased by 3,975 mt to 22,645 mt, with the main declines still seen in Kaohsiung and Singapore warehouses. Meanwhile, SMM social inventory of lead ingots across five regions continued to edge up slightly compared to Monday.

Today's Lead Price Forecast: 

Recently, the lead market experienced roller-coaster fluctuations, with strong wait-and-see sentiment prevailing among upstream and downstream enterprises. Lead consumption remained weak, prompting downstream enterprises to generally reduce or suspend procurement. Additionally, due to the earlier New Year's holiday, downstream enterprises had taken time off, and lead smelters had already accumulated a certain amount of inventory. Some lead ingot in-factory inventory began flowing into social warehouses. Another notable factor was the widening spread between futures and spot prices, which in some regions far exceeded 200 yuan/mt, encouraging suppliers to increase shipments to delivery warehouses. Next week, the SHFE lead 2601 contract will enter the delivery period. Attention should be paid to the possibility of an increase in lead ingot social inventory resulting from suppliers relocating and delivering stocks before the delivery date.

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.