Short Funds' Concentrated Entry and Weak Macro Demand Suppress Lead Prices at Low Levels [Lead Futures Brief Review]

SMM, July 1 –

The most-traded SHFE lead 2608 contract opened at 15,975 yuan/mt intraday. It drifted lower at the beginning of the session, dipped to 15,765 yuan/mt, broke below the support level and slightly recovered. During the session, it rebounded to the 15,810-15,870 yuan/mt range and moved sideways, edged up near the close, and finally settled at 15,875 yuan/mt, posting a bearish candlestick, down 120 yuan/mt, or 0.75%. From the sentiment perspective, today's session was dominated by a concentrated influx of additional bearish positions that drove the decline, while the bulls' buying power was weak. Only a small amount of short-covering toward the close led to a slight recovery in prices. Bears held absolute dominance throughout the day. On the macro front, expectations for US Fed interest rate hikes continued to pressure lead prices. Markets outside China entered the traditional Q2 consumption off-season, with pronounced bearish factors on the demand side. Even though LME inventories saw mild destocking in June, it was unable to reverse the weak pattern. In China, production cuts at secondary lead smelters meant the supply-side contraction could not offset the weakness in demand, confirming a clear supply-demand weakness pattern in the industry. Downstream enterprises showed strong wait-and-see sentiment, with purchases mostly meeting rigid demand. In the short term, lead prices are expected to continue in the doldrums.

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