Macro Tailwinds Exhausted, Lead Market Returns to Fundamentals, Lead Prices May Remain in the Doldrums This Week [SMM Lead Morning Meeting Minutes]

Futures:

On Friday evening, LME lead opened at $2,098/mt, fluctuated downward after the opening, and continued to decline during the Asian trading session. It hit a low of $2,036.5/mt before closing, finally settling at $2,038/mt, down by $58.5/mt, or 2.79%.

On Friday evening, the most-traded SHFE lead contract opened higher with a gap at 17,400 yuan/mt. At the beginning of the session, it was dragged down by the weakening LME lead, quickly breaking through the support level of 17,300 yuan/mt, then fluctuated and tested the low of 17,200 yuan/mt, finally closing at 17,230 yuan/mt, down by 365 yuan/mt, or 2.07%.

This week, the US Supreme Court may rule on the Trump tariff case; the independence of the US Fed will face a major test as the Supreme Court hears the case of Fed Governor Cook; Japan's Prime Minister may dissolve the House of Representatives and hold an early general election, and the Bank of Japan will announce its interest rate decision. Several EU countries are considering imposing additional tariffs on 93 billion euros worth of US goods exported to Europe, or restricting access for US enterprises to the EU market, in retaliation against President Trump's tariffs on eight European countries for his interest in Greenland. The renewed tariff threats between the US and Europe led to a significant rise in gold and silver prices, while stock index futures fell by 1%. On Monday's opening, spot gold and silver opened higher with a gap. According to the announcement by the People's Bank of China, starting from January 19, the relending and rediscounting rates were cut by 0.25 percentage points. The CSRC held the 2026 system work conference, emphasizing the need to maintain stability and consolidate the positive momentum in the market.

Spot fundamentals:

In Shanghai, Honglu lead was quoted at premiums of 80 yuan/mt against the SHFE 2602 contract. After SHFE lead pulled back from its high, suppliers adjusted their quotations according to the market, mainly offering cargoes self-picked up from primary lead smelters. Spot lead was generally quoted at discounts, with mainstream production areas quoting 60-0 yuan/mt below the SMM #1 lead average price. Secondary lead smelters had high inventories, and secondary refined lead was quoted at 300-100 yuan/mt below the SMM #1 lead average price. In some regions, smog warnings were issued, leading to partial production restrictions for lead smelters, which is expected to ease the pressure on suppliers to sell. Downstream enterprises had limited rigid demand, with a strong wait-and-see sentiment, few inquiries, and most enterprises focusing on digesting inventories, resulting in persistently weak transactions in the spot market.

Inventory: On January 16, LME lead inventory decreased by 5,050 mt to 206,350 mt. As of January 15, the social inventory of lead ingots in five regions tracked by SMM showed an upward trend.

Today's lead price forecast:

For primary lead, smelters are undergoing both maintenance and resumption, but the current market has ample circulating supplies, making it difficult to improve the situation of discount transactions in the spot market. For secondary lead, smog warnings in some regions have led to production cuts, temporarily easing the pressure on smelters to sell. However, before lead consumption improves, the extent of discounts for secondary lead is expected to be limited. In January, consumption in the lead-acid battery market, the largest segment being the e-bike lead-acid battery market, weakened, with demand from downstream enterprises declining, and inventories at smelters and social warehouses accumulating simultaneously, while spot discounts widened. With macroeconomic positives exhausted, and amid a general decline in non-ferrous metals last Friday night, lead prices nearly erased all gains from the previous week. In an environment of weak consumption, lead prices are likely to remain in the doldrums this week.