Supply Divergence and Weakening Demand: Raw Material Costs Support Lead Prices [SMM Lead Morning Brief]

SMM June 30:

Overnight, the LME lead 3M contract opened at $1,903.5/mt, with funds steadily pushing up the futures during Asian trading; prices kept drifting higher and hit the intraday high of $1,914/mt. During European trading, bullish strength quickly faded, and the futures came under pressure and weakened, beginning a continuous drift lower, probing down to a low of $1,890/mt. Late in the session, losses narrowed slightly, eventually closing at $1,892.5/mt, down $9/mt, or 0.47%.

Overnight, the most-traded SHFE lead 2608 contract opened at 16,180 yuan/mt, briefly dipped in early trading to a low of 16,125 yuan/mt, before bulls quickly counterattacked, driving prices to drift higher and hit 16,200 yuan/mt; after the spike, upward momentum quickly faded, and the futures remained under pressure below the intraday average price line, drifting lower, eventually closing at 16,130 yuan/mt, down 60 yuan/mt, or 0.37%, forming a small bearish candlestick that retreated after a rapid rise.

Recently, some secondary lead smelters undergoing maintenance have slightly delayed their maintenance recovery schedules, while some secondary lead smelters have resumed production, creating a mix of bullish and bearish factors on the secondary lead supply side. However, downstream consumption recovery has been slow, and enterprises’ purchase willingness remains weak. Coupled with the off-season and high-temperature weather, some downstream enterprises plan to halt production for holidays, further weakening the consumption side. Under the continuous decline in lead prices, the price inversion between primary and secondary lead and high scrap battery costs provide support for lead prices.