Overnight LME lead dipped then rallied, pulling back after hitting $1,897/mt [SMM Lead Morning Brief]

SMM, August 7:

Overnight, LME lead opened at $1,892.5/mt, drifted lower during the Asian session. Entering the European session, LME lead first dipped then rebounded, hitting a low of $1,880/mt before quickly surging to a high of $1,897/mt, then weakened near the end of the session as bears added positions, finally closing at $1,884.5/mt, down 0.29%.

Overnight, the most-traded SHFE lead 2609 contract opened higher with a gap at 15,700 yuan/mt, briefly touched a high of 15,760 yuan/mt at the start of the session, then drifted lower as bears cut positions, dipping to a low of 15,665 yuan/mt near the end, and finally closed at 15,680 yuan/mt, up 0.19%.

Early this week, lead prices slumped sharply, falling to a more-than-three-year low. Risk aversion sentiment heated up in the spot market. Lead smelters generally held back from selling at low prices, while downstream enterprises exhibited a mix of wait-and-see caution on fears of further declines and dip-buying. With smelters holding back sales and the availability of circulating cargoes tightening, some downstream enterprises turned to purchasing from social warehouses, which led to a decrease in lead ingot social inventory during the week. However, as the front-month SHFE lead contract approaches delivery, some delivery brand cargoes continue to be moved to delivery warehouses, and social inventory still faces the risk of buildup. Watch out for its drag on lead prices. Moving into mid-to-late August, attention should also be paid to the maintenance progress of primary lead smelters and its impact on lead ingot social inventory.