Demand Weakens in Tandem in and Outside China, Lead Prices Remain in the Doldrums [SMM Lead Morning Brief]

SMM July 1 news:

Overnight, the LME 3-month lead contract opened at $1,890.5/mt. Early in the session, prices consolidated repeatedly, rising intraday to $1,898/mt. Subsequently, upward momentum from bulls faded, and prices drifted lower. The decline accelerated during the European session, with prices dropping to $1,871/mt. Towards the close, they stabilized and rebounded slightly, finally closing at $1,872/mt, recording a bearish candlestick. The contract fell $20.5/mt, a decrease of 1.08%.

Overnight, SHFE lead contract 2608 opened slightly lower at 16,040 yuan/mt. After briefly rising to 16,065 yuan/mt at the open, bulls lost steam, bears stepped in, and prices continued to pull back, dropping to an intraday low of 15,950 yuan/mt. At the low, slight buying support prompted a minor rebound, and the contract finally closed at 15,975 yuan/mt, falling 75 yuan/mt, a decrease of 0.47%. Trading volume expanded, and open interest increased slightly by 238 lots. The trend retreated after a rapid rise, remaining generally weak.

Expectations for US Fed interest rate hikes continue to suppress lead prices from a macro perspective. Although LME inventory pulled back slightly, the ex-China Q2 consumption off-season brings bearish demand factors. In China, primary smelters implemented minor production cuts due to ore supply constraints, while secondary smelters, hampered by losses and scrap battery raw material shortages, operated at lower rates, resulting in weak supply and demand in the market. Downstream users maintained a wait-and-see sentiment, only engaging in dip-buying on an as-needed basis. Short-term lead prices are likely to stay in the doldrums.