Supply and Demand Decline Before the Holiday, Coupled with Secondary Lead Inclusion in Deliveries, Lead Prices Expected to Remain in the Doldrums [SMM Lead Morning Meeting Minutes]

Futures:

Last Friday, LME lead opened at $2,009.5/mt. Influenced by concentrated capital outflows, both precious and non-ferrous metals generally declined, with LME lead fluctuating downward throughout the day. It hit a session low of $1,980/mt, marking a new low in over a month. Losses were slightly pared by the close, with the contract finally settling at $1,995/mt, down 0.8%.

Last Friday, the most-traded SHFE lead 2603 contract opened at 16,915 yuan/mt. An initial attempt to rebound to the 17,000 yuan/mt level failed. Subsequently affected by the decline in LME lead, SHFE lead traded in the doldrums during the night session, mostly moving within the range of 16,900-16,950 yuan/mt. It finally closed at 16,940 yuan/mt, down 0.79%. Open interest decreased by 2,012 lots from the previous trading day to 54,468 lots.

On the macro front:

Last Friday, Trump's nomination of Warsh for Fed Chairman ignited market expectations for a hawkish stance. US PPI inflation data unexpectedly rose, US stocks fell, the US dollar recorded its largest single-day gain since last May, and precious metals plummeted. The US Senate passed a $1.2 trillion government spending bill, but a brief shutdown was unavoidable; Speaker Johnson expressed "confidence" that the government would resume operations before Tuesday. Trump stated that the US and Iran were negotiating, while an advisor to Iran's Supreme Leader said a "negotiation framework" was taking shape. Trump also indicated that negotiations regarding Greenland were close to an agreement.

:

In the lead spot market last Friday, offers for lead ingot warehouse cargoes in the Jiangsu, Zhejiang, and Shanghai region were scarce. Most suppliers continued to actively sell cargoes of primary lead for self-pickup from production sites, with quoted discounts (against the SHFE lead 2603 contract) widening further from the previous day. However, some smelters, approaching holidays, showed reluctance to sell at low prices, narrowing their quoted discounts to premiums of -30 to +20 yuan/mt against the SMM #1 lead average price, ex-works. In the secondary lead sector, as more smelters began holidays, secondary refined lead was quoted at discounts of 120-0 yuan/mt against the SMM #1 lead average price, ex-works. With the Chinese New Year holiday approaching, some downstream enterprises had already stopped purchasing spot orders, resulting in fewer inquiries, while others made purchases based on rigid demand when prices were low. Spot market transactions improved relatively.

Inventory: As of January 30, LME lead inventory decreased by 2,100 mt to 205,575 mt; SMM's social inventory of lead ingots across five regions continued its upward trend, reaching a two-month high.

Today's Lead Price Forecast:

Persistent inventory buildup of domestic lead ingots weighed on lead prices. Entering February, the Chinese New Year atmosphere in the lead market will intensify, with lead smelters and lead-acid battery enterprises successively entering holiday mode, leading to a decline in both supply and demand for lead ingots. Additionally, last Friday, the SHFE announced plans to introduce secondary lead as an alternative delivery brand for lead futures, which implies an increase in the deliverable volume of lead ingots and is expected to impact market trading sentiment 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 provided for reference only, not as decision-making advice.