Supply-Side Contraction Expectations Alleviate Lead Price Decline, Lead Futures Stabilize After Fluctuations and Stop Falling and Rebound [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,029.5/mt, edged up slightly during the European session, continued to rise and touched a high of $2,049.5/mt after entering the Asian session, then weakened, touched a low of $2,021/mt before consolidating slightly, and finally closed at $2,024.5/mt, down $3.5/mt or 0.17%.

Overnight, the most-traded SHFE lead contract opened at 17,100 yuan/mt, hovered around the daily moving average at the beginning of the session before moving down to touch a low of 17,080 yuan/mt, then rose to make up for gains, and finally closed at 17,130 yuan/mt, up 55 yuan/mt or 0.32%.

An official from the National Development and Reform Commission (NDRC) stated that macro policies in 2026 will focus on strengthening the domestic circulation and expanding domestic demand in all aspects. The proactive fiscal policy will continue in 2026, with continued issuance of ultra-long-term special government bonds to support the program of implementing major national strategies and building up security capacity in key areas and the program of large-scale equipment upgrades and consumer goods trade-ins, along with policy optimization. The continuation of the proactive fiscal policy, with the deficit ratio likely maintained at around 4%, will provide support for stabilizing growth. The Greenland crisis took a turn for the better, as US President Trump announced that a framework agreement on the Greenland issue had been reached with NATO Secretary General Rutte. If this plan is ultimately implemented, it will be highly beneficial for the US and all NATO member states. Trump stated that the tariff measures originally scheduled to take effect on February 1 would not be implemented.

Spot fundamentals:

Lead warrant quotations in Jiangsu, Zhejiang, and Shanghai were scarce, suppliers mainly offered cargoes self-picked up from primary lead production sites, spot quotation discounts narrowed slightly compared to the previous day, with mainstream origin quotations against the SMM #1 lead average at discounts of 50-0 yuan/mt ex-works. Meanwhile, secondary lead smelters also narrowed their quotation discounts, but regional differences remained significant, with secondary refined lead quotations against the SMM #1 lead average at discounts of 175-0 yuan/mt ex-works. Additionally, downstream enterprises maintained their wait-and-see sentiment, a small number of companies showed slightly better inquiry enthusiasm, but purchased cautiously, and spot order market transactions remained sluggish.

Inventory: On January 21, LME lead inventory fell by 2,925 mt to 222,650 mt. As of January 19, SMM lead ingot social inventory across five regions continued its accumulation trend.

Today's lead price forecast:

Lead prices stopped falling and rebounded yesterday, downstream purchasing enthusiasm improved slightly, some downstream enterprises mentioned pre-Chinese New Year stocking demand, but considering actual end-user order performance, the 2026 Chinese New Year stocking expectations may fall short of the same period last year. Affected by severe weather in north China, some recyclers took holidays early, expectations of supply-side contraction alleviated the decline in lead prices, and subsequent attention should still be paid to expectations for production cuts at secondary refined lead smelters and whether quotation discounts narrow.