Bull Funds Withdraw, Lead Prices Move Downwards After a Higher Opening [SMM Lead Morning Meeting Minutes]

Futures:

LME lead opened higher with a gap at $2,059/mt overnight, fluctuated rangebound at $2,050-2,060/mt in Asian hours, touched $2,067/mt in European trading as bears covered, then pulled back late to a low of $2,047.5/mt and closed at $2,053/mt, up $6.5/mt or 0.32%, posting a small bearish candlestick.

The most-traded SHFE lead 2602 contract gapped up at 17,480 yuan/mt overnight; early profit-taking by bulls sent the contract lower to 17,360 yuan/mt, then it hovered at 17,390-17,440 yuan/mt before a final pullback to close at 17,395 yuan/mt, down 45 yuan/mt or 0.26%, ending a two-day rally with a small bearish candlestick.

Macro:

Trump said any country doing business with Iran will face a 25% tariff. Apple chose Google Gemini to power this year’s Siri. Musk hinted Google may be monopolistic. The SGE pledged to keep controlling near-term market risks. MOFCOM’s update on China-EU EV talks: the EU will issue “Guidance on Submitting Price Undertaking Applications”.

:

SHFE lead hovered at highs; suppliers actively widened discounts, especially for primary lead cargoes self-picked up from smelters, with mainstream origins quoted against the SMM #1 lead average at discounts of 30 yuan/mt to premiums of 30 yuan/mt. Refined lead spot orders were mainly quoted at discounts of 250-100 yuan/mt to the SMM #1 lead average, ex-plant VAT-included; VAT-ex-plant offers ranged 15,700-15,900 yuan/mt. The spot order market was “priced but not traded”; some suppliers withheld cargoes while battery producers showed low purchase willingness, mostly waiting to buy after delivery.

Inventory:LME lead inventory fell 1,275 mt to 221,450 mt on Jan 13. As of Jan 12, SMM lead ingot social inventory in five cities trended higher.

Lead price outlook:

After last week’s decline, some secondary lead smelters left scrap-battery purchase prices unchanged, easing suppliers’ hold-back mood and lifting delivery willingness. Most smelters that had cut output on tight raw material are returning to normal rates. Yet weak purchase willingness from battery producers has started to swell lead ingot social inventory. With the SHFE delivery nearing, suppliers are expected to shift stocks into delivery warehouses, so social warehouse inventory will also rise. Overall, after the delivery date, lead prices may face the risk of retreating after a rapid rise due to bearish factors such as the accumulation of social inventory.

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