Futures:
Last Friday, the LME lead 3M contract opened at $1,869.0/mt, drifted higher during the day to touch a high of $1,891.0/mt, pulled back slightly in the early morning, and finally settled at $1,885.5/mt, up $22.0/mt or 1.18% from the previous trading day's closing price. Trading volume was 7,573 lots and open interest was 194,232 lots, with the daily candlestick closing bullish.
Last Friday, the SHFE lead 2611 contract opened higher at 16,035 yuan/mt in the night session, shot up quickly after the open to touch a high of 16,105 yuan/mt, filling the previous gap, then consolidated at highs and pulled back slightly near the close, finally settling at 16,080 yuan/mt, up 100 yuan/mt or 0.63% from the previous trading day's closing price. Night session trading volume was 26,933 lots and open interest was 60,917 lots, with the daily candlestick closing as a small bullish candlestick.
On the macro front:
Overseas, Middle East geopolitical tensions remained volatile. The US accepted some of Iran's conditions for reopening the Strait of Hormuz, but the response was deemed insufficient. The Houthis claimed to have launched four rounds of attacks on Saudi Arabia, striking airports and energy facilities, and the attack on Riyadh airport caused casualties, continuing to disrupt oil prices and risk sentiment. Hurricane Isaias approached the Gulf of Mexico, shutting down more than 70% of local crude oil production, keeping international oil prices high. US consumer confidence hit a new low since May and inflation expectations heated up. The US dollar index rose for a fourth consecutive week to 102.22, and the 10-year Treasury yield stayed above 5.2%. Under safe-haven and inflation trades, spot gold and silver rose 1.47% and 2.78%, respectively, with the precious metals sector strong throughout the day. Today, attention may turn to the IMF and World Bank annual meetings, and Fed official Harker's speech in the early hours of the next day.
In China, the CPC Central Committee and the State Council issued the Opinions on Developing New Quality Productive Forces. The National Development and Reform Commission (NDRC) pushed for the early commencement of major projects under the 15th Five-Year Plan and the "Six Networks" initiative to release domestic demand. The Ministry of Finance arranged to use 550 billion yuan of the local government debt carryover quota. China and the EU reached an understanding on hybrid vehicle trade. The China Securities Regulatory Commission held an expert symposium on capital market and financial conditions.
Spot fundamentals:
Last Friday, SMM #1 lead price fell 200 yuan/mt from the previous trading day. Lead prices reversed course and pulled back, but market circulating supply was limited. Suppliers held prices firm and maintained premium quotes, with quoted premiums over SMM #1 lead significantly higher than the previous trading day. Ex-works cargoes from primary lead smelters generally shifted to premiums, with mainstream production areas quoting premiums of 75-150 yuan/mt over the SMM #1 lead average price. Secondary lead smelters held back from selling at low prices and quoted firmly, with secondary refined lead quoted at premiums of 0-75 yuan/mt over the SMM #1 lead average price ex-works. Downstream enterprises turned more cautious in purchasing, with wait-and-see sentiment intensifying. Only a small amount of just-in-time procurement was made, and some enterprises only made inquiries without purchasing. Overall market transactions turned quiet.
Inventory: As of October 9, LME lead inventory stood at 347,125 mt, down 750 mt from the previous trading day. Total SHFE lead ingot warrant inventory was 42,257 mt, unchanged from the previous trading day.
Today's lead price forecast:
On Friday night, SHFE lead in the night session filled the gap left by the earlier jump, while LME lead stabilized in tandem. The short-term decline in futures slowed down. In China's spot market, circulating supply was limited, with suppliers and smelters generally holding prices firm and raising premiums, providing support for spot prices. However, downstream enterprises showed intensifying wait-and-see sentiment, with some only making inquiries without purchasing. Subdued transactions may limit further expansion in spot lead prices. Outside China, LME lead rebounded and LME inventory saw slight destocking, with sentiment in the LME market also recovering. Spot lead prices are expected to stabilize along with futures and consolidate with a firmer bias today, but overall remain largely stable with relatively small room for gains.
