Spot Market Trading Remains Sluggish, Beware of the Negative Sentiment Amplification from Dual Declines in Supply and Demand on Lead Prices [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $2,027.5/mt, fluctuated rangebound along the daily average during the Asian session. Entering the European session, the rangebound trend continued with an expanded range of $2,016-2,036/mt. It finally closed at $2,027/mt, down $1/mt or 0.-05%. A small bearish candlestick was recorded.

Overnight, the most-traded SHFE lead 2603 contract opened at 17,000 yuan/mt. After briefly weakening at the beginning of the session, it quickly climbed above the 17,000 yuan mark and fluctuated rangebound. After touching a high of 17,055 yuan/mt, it declined again, giving up part of the gains. It finally closed at 17,010 yuan/mt, up 15 yuan/mt or 0.09%, ending a four-day losing streak and forming a small bullish candlestick, with the KDJ lines converging.

On the macro front:

The US Fed pressed the pause button at its January meeting, keeping interest rates in the 3.5-3.75% range; Milan and Waller supported a 25-basis-point rate cut. Powell reiterated that rates are at the high end of the neutral range, policy is not on a preset course, decisions are data-dependent, and indicated that policy could be relaxed if tariff-induced inflation peaks and pulls back. He advised his successor to stay away from politics. The State-owned Assets Supervision and Administration Commission is studying and drafting a working document on promoting central state-owned enterprises to cultivate emerging pillar industries. The Shanghai Gold Exchange adjusted the margin levels and price limits for silver deferred contracts; the SHFE adjusted the price limits and trading margin ratios for related futures contracts such as gold, silver, and nickel.

:

SHFE lead was in the doldrums. Suppliers sold goods following the market trend, and as it was the month-end period, some suppliers actively recouped funds, leading to expanded premiums for cargoes self-picked up from the production site against the SHFE lead 2603 contract. A small number of lead smelters were reluctant to sell at low prices, mainly shipping under long-term contracts. Quotations from mainstream producing areas were at premiums of around -50 yuan/mt against the SMM #1 lead average price, ex-factory. Divergence persisted among secondary lead enterprises regarding shipments; individual enterprises halted shipments for early holidays, while others actively shipped goods. Secondary refined lead quotations were at premiums of -200 to 0 yuan/mt against the SMM #1 lead average price, ex-factory. Downstream enterprises had limited procurement demand at month-end, with only a few making just-in-time procurement. Spot market transactions were sluggish.

Inventory: On January 28, 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.

Today's Lead Price Forecast:

Environmental protection-related controls were implemented again in regions like central and east China, with some lead smelters cooperating to cut production by 30%, and individual enterprises halted production for holidays. Due to tight supply in the scrap battery market, the impact on raw material arrivals was not prominent. Currently, leading downstream battery producers are facing significant finished product inventory pressure, while small and medium-sized battery enterprises are only sporadically purchasing lead ingots, with overall pre-holiday stockpiling enthusiasm being mediocre. Regional tightening on the supply side will alleviate the pressure of continuous lead ingot inventory buildup. As the Chinese New Year holiday approaches, be cautious of the bearish sentiment on lead prices being amplified by the supply-demand dual decline trend.

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, for reference only and do not constitute decision-making advice.