Lead Market Consumption in the Doldrums, Inventory Accumulates, Lead Prices Continue to Fluctuate Weakly [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,048.5/mt. After a slight increase at the beginning of the session, it fluctuated downward. Entering the Asian session, it continued to decline, probing a low of $2,039.5/mt, before rising to make up gains and touching a high of $2,065/mt, eventually closing at $2,064.5/mt, up $26.5/mt, a gain of 1.3%.

Overnight, the most-traded SHFE lead contract opened at 17,250 yuan/mt. After falling to probe a low of 17,195 yuan/mt at the beginning of the session, it rose to touch a high of 17,275 yuan/mt. Subsequently, it weakened slightly and fluctuated around the daily moving average before closing at 17,250 yuan/mt, down 10 yuan/mt, a decline of 0.06%.

The International Monetary Fund (IMF) released an update to its World Economic Outlook report, raising its global economic growth forecast for 2026 by 0.2 percentage points to 3.3%. The IMF also raised its 2026 economic growth forecasts for China, the US, the Eurozone, and Japan. China's 2025 "report card" was released. According to preliminary calculations by the National Bureau of Statistics (NBS), China's GDP grew 5% YoY in 2025, the value-added of industrial enterprises above the designated size grew 5.9% YoY, and the manufacturing scale remained the largest globally. The value-added of the service sector grew 5.4%, and its share of GDP increased to 57.7%. Five departments, including the Ministry of Industry and Information Technology (MIIT), jointly deployed the construction of zero-carbon factories, aiming to cultivate a number of zero-carbon factories in industries such as automobiles, lithium batteries, PV, and electronic appliances by 2027. By 2030, this will gradually expand to traditional high energy-consuming industries such as steel, non-ferrous metals, and petrochemicals.

Spot Fundamentals:

In the Shanghai region, Honglu lead was quoted at a premium of 100 yuan/mt against the SHFE lead 2602 contract. The price center of SHFE lead moved further downward. However, due to limited warrant supply, quotations were scarce. Suppliers mainly sold primary lead cargoes self-picked up from production sites. Due to significant sales pressure, even as lead prices fell, the quoted discounts did not narrow. Quotations for mainstream origins against the SMM #1 lead average price were at discounts of 75-0 yuan/mt ex-works. Secondary lead smelters showed significant divergence in sales strategies; some withheld offers due to reluctance to sell at low prices, while others sold due to fear of price declines. Secondary refined lead quotations were at discounts of 200-50 yuan/mt against the SMM #1 lead average price ex-works. Additionally, heavy snow in regions such as Henan and Anhui affected transportation, prolonging the lead ingot shipping cycle. Downstream enterprises exhibited strong wait-and-see sentiment, with few inquiries. Some continued to pick up long-term contracts, resulting in thin trading in the spot order market.

On January 19, LME lead inventory decreased by 2,850 mt to 203,500 mt. As of January 19, SMM's lead ingot social inventory across five regions continued its accumulation trend.

Today's Lead Price Forecast:

Lead prices pulled back after hitting highs. Lead consumption performance was poor, with downstream enterprises generally cautious about purchasing due to fear of price declines, making only just-in-time procurement. Trading activity in the spot market was weak, and destocking at lead smelting enterprises slowed down. Secondary refined lead: Some secondary lead smelters plan to lower procurement offers for waste lead-acid batteries, and recyclers' sentiment to sell due to fear of price declines intensified. Due to blizzard conditions in Henan, Anhui, and other regions, some expressway sections were closed, slowing the pace of lead ingot transportation. Arrivals at social warehouse inventories tapered off. Once the transportation constraints are lifted, social inventory of lead ingots is expected to see some increase. This week, the lead market's fundamentals showed no significant highlights, and weak fluctuations are likely to persist in the short term.