Lead Ingot Inventory Buildup and Losses in a Stalemate, Lead Prices Expected to Be in the Doldrums [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,995/mt. Affected by the broad decline in precious and non-ferrous metals, LME lead's trading center shifted further downward, hitting a low of $1,952.5/mt during the session, the lowest in nearly one and a half months. The losses were slightly pared by the close, with the contract finally settling at $1,970.5/mt, down 1.23%.

Overnight, the most-traded SHFE lead 2603 contract opened at 16,690 yuan/mt. A price collapse in non-ferrous metals, coupled with lead ingot inventory buildup, led to concentrated bearish entry at the opening, pushing SHFE lead to a low of 16,565 yuan/mt, the lowest level in 10 months. Subsequently, the tug-of-war between longs and shorts intensified, and SHFE lead gradually recovered some losses, finally settling at 16,675 yuan/mt, down 0.77%. Its open interest fell to 55,993 lots, down 1,036 lots from the previous trading day.

On the macro front:

The US January ISM Manufacturing Index rose to 52.6, significantly exceeding expectations and hitting a new high since February 2022. A potential US government shutdown delayed key data again, with Tuesday's December JOLTS job openings report and Friday's non-farm payrolls report rescheduled. Trump: The US and India reached a trade agreement, reducing the reciprocal tariff on India from 25% to 18%, and Modi agreed to halt purchases of Russian oil.

:

In the lead spot market yesterday, lead prices fluctuated downward. With the Chinese New Year holiday approaching, suppliers actively cleared stocks for shipment. Few warrants were quoted, with cargoes mainly self-picked up from production sites, typically sold at discounts. However, smelters were reluctant to sell at low prices, leading to narrower quoted discounts. Mainstream origin quotations against the SMM #1 lead average price were at discounts of 75 yuan/mt to premiums of 25 yuan/mt ex-works. In the secondary lead sector, losses widened, reducing smelters' willingness to sell. Secondary refined lead quotations against the SMM #1 lead average price were at discounts of 75-0 yuan/mt ex-works, with secondary refined lead prices in some regions already higher than primary lead. Downstream enterprises had limited pre-holiday stockpiling, and most had completed their stockpiling. After the lead price fell, downstream purchasing enthusiasm was poor, with few inquiries, and only some deeply discounted cargoes were traded.

Inventory: As of February 2, LME lead inventories decreased by 1,500 mt to 204,075 mt. SMM lead ingot social inventories across five regions continued to increase, reaching a two-month high.

Today's Lead Price Forecast:

With less than half a month until the Chinese New Year holiday, overall demand in the lead-acid battery market remains weak. Dealers have successively completed pre-holiday stockpiling, lead-acid battery enterprises face sluggish finished product inventory sales, and plan to start holidays early. Meanwhile, they show little interest in pre-holiday lead ingot stockpiling. However, smelters and traders actively sold off goods and cleared stocks before the holiday. Spot lead was generally sold at a discount, with the spread between futures and spot prices remaining around 250 yuan/mt. Suppliers faced difficulties in offloading goods, transferring in-factory inventory to social inventory. Additionally, as lead prices fell, the issue of losses in secondary lead production became prominent. In the short term, the contradiction between losses and inventory buildup is being contested, and lead prices are expected to remain in the doldrums.

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. These data are for reference only and do not constitute decision-making advice.