Spot lead ingot oversupply, lead prices fluctuate at lows [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,035.5/mt. During the Asian session, it fluctuated considerably along the daily moving average. Entering the European session, after a brief consolidation, influenced by increased bearish positions, LME lead fluctuated downward, touching a low of $2,009/mt. It saw a slight rebound late in the session, with the latter half of the trend forming a "V" shape. It finally closed at $2,028/mt, down $8/mt, a decrease of 0.39%. This ended a three-day winning streak, recording a small bearish candlestick with a long lower shadow.

Overnight, the most-traded SHFE lead 2603 contract opened at 17,000 yuan/mt. After a slight rise to around 17,070 yuan/mt at the beginning of the session, a large amount of bearish funds flowed in, causing SHFE lead to fall sharply, reaching a low of 16,915 yuan/mt. It recovered all losses by the end of the session, finally closing at 17,000 yuan/mt, with a % change of 0.00%. This ended a three-day losing streak, forming a doji, with the KDJ line gap narrowing and showing signs of closing.

On the macro front:

India-EU Free Trade Agreement announced: Tariffs on over 90% of EU export goods will be eliminated or reduced, with auto tariffs gradually cut to 10%. The EU will phase out tariffs on Indian goods to zero over 7 years, excluding automobiles, steel, and agricultural products. Fed mouthpiece: The US Fed is expected to pause interest rate cuts, and the path to resuming cuts remains unclear. Ministry of Human Resources and Social Security: The annual total revenue of the three social insurance funds was 9.1 trillion yuan, total expenditure was 8.1 trillion yuan, and the cumulative balance at the end of the year was 10.2 trillion yuan, with overall stable fund operation.

:

Yesterday, the trading center of SHFE lead continued to move lower, falling below the 17,000 yuan/mt level. Suppliers had mixed sentiments about selling. Warrant cargoes were limited, and quoted premiums remained unchanged from the previous day. Traders' quotations for cargoes self-picked up from the production site saw narrowed discounts (against the SHFE lead 2603 contract), while smelters' selling quotations saw widened discounts. Quotations from mainstream production areas were at discounts of 60-50 yuan/mt against the SMM #1 lead average price, ex-works. Secondary lead smelters narrowed their quoted discounts due to losses, while traders actively sold goods. Quotations for secondary refined lead were at varying discounts of 150-50 yuan/mt against the SMM #1 lead average price, ex-works, with the lower prices offered by traders. Downstream enterprises made purchases as needed at low prices, and inquiries relatively increased. However, due to limited rigid demand, spot transactions saw no significant improvement and remained scattered.

Inventory: On January 27, LME lead inventory decreased by 2,425 mt to 211,175 mt. As of January 26, SMM lead ingot social inventory across five regions maintained an upward trend, again refreshing the highest level in nearly two months.

Today's lead price forecast:

Downstream battery producers gradually started stockpiling, but generally expect lead smelter quotations to further widen their discounts. Supply side showed divergence: some primary lead suppliers chose to widen discounts to promote transactions due to high inventory pressure; while secondary lead suppliers found it difficult to expand discount margins due to losses. Demand side, end-use consumption remained weak, leading to limited overall restocking by downstream battery producers. Overall, the market is currently in an oversupply situation, and lead prices are expected to continue fluctuating at lows in the short term.

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.