Futures:
Overnight, the LME lead 3M contract opened at $1,884.5/mt, accelerated its rise during European and US trading hours, hit a high of $1,904.5/mt, and finally settled at $1,903.0/mt, up $20.5/mt or 1.09% from the previous trading day's closing price. Trading volume was 8,184 lots and open interest was 187,833 lots, with the daily candlestick recording a large bullish candle.
Overnight, the SHFE lead 2611 contract opened at 16,350 yuan/mt, briefly dipped after the open before quickly rallying, hit a high of 16,410 yuan/mt, consolidated at highs near the close, and finally settled at 16,400 yuan/mt, up 120 yuan/mt or 0.74% from the previous trading day's close. Trading volume was 32,354 lots, open interest was 51,160 lots, down 4,647 lots, with the daily candlestick recording a large bullish candle. Note that the SHFE lead 2610 contract has entered the delivery period, and the most-traded contract is rolling over from 2611 to 2612, with funds gradually migrating to deferred months.
On the macro front:
Outside China, US Fed officials gave mixed signals. Some were hawkish, saying there could be one more interest rate hike this year, and if the outlook matches expectations, no further hikes may be needed next year. Collins was more dovish, seeing room for further interest rate cuts this year, with the path depending on economic data. The market awaits tonight's US September CPI and the Beige Book to be released early next morning. The US dollar index retreated from 18-month highs, closing down 0.35% at 102.2, easing valuation pressure on nonferrous metals somewhat. The Middle East situation continued to escalate, with Houthi forces attacking container ships and oil tankers. Saudi Arabia issued an ultimatum to the Houthis and sent warships to intercept tankers, while Trump said the Houthis may be deliberately pushing up oil prices. The conflict at the world's largest copper mine in Chile escalated, with over 1,000 workers potentially striking on Wednesday, causing some disturbance to sentiment in the copper and nonferrous metals sector.
In China, President Xi Jinping met with the visiting president of the DRC, and the two sides exchanged views on China-Africa mining cooperation, among other topics, drawing attention to expectations for overseas mineral cooperation. The Ministry of Commerce and other departments jointly issued measures for the administration of export certificates for aerospace-related dual-use items. On the data front, China's September CPI and PPI will be released at 09:30 today, and the September trade balance is also pending release.
Spot fundamentals:
Yesterday, SMM #1 lead prices rose 100 yuan/mt from the last trading day before the holiday. SHFE lead rose sharply, and suppliers were active in selling, but circulating supply in the market tightened, with some spot cargoes sold out and switched to pre-sales. Mainstream production areas sold primary lead at premiums of 30-150 yuan/mt against the SMM #1 lead average price ex-works. For secondary lead, due to regional supply tightness and smelters holding prices firm, mainstream production areas sold at premiums of 50-150 yuan/mt against the SMM #1 lead average price ex-works. Downstream buying enthusiasm weakened, with purchases mainly under long-term contracts for cargo pick-up, while spot order transactions turned softer. Aside from just-in-time procurement, most buyers stayed on the sidelines and bought cautiously, with overall trading activity declining.
Inventory: As of October 13, LME lead inventory stood at 341,825 mt, down 3,725 mt from the previous trading day; total SHFE lead ingot warrant inventory was 42,056 mt, unchanged from the previous trading day.
Lead price forecast for today:
Overnight, SHFE and LME both strengthened in tandem, with LME lead breaking above the $1,900 mark on higher volume and SHFE lead in the night session surpassing its post-holiday rebound high. Additionally, LME lead inventory destocking, the approaching delivery of the SHFE lead 2610 contract in China, and tight circulating supply in the lead market prompted suppliers to hold prices firm and hold back from selling. However, downstream acceptance of high prices was limited, with purchases mainly made through long-term contracts and just-in-time procurement, while spot order transactions were weak. Moreover, both LME lead 3M and the SHFE lead 2611 contract are nearing short-term overbought territory. Spot lead prices today are expected to consolidate on a strong note with modest gains, and continued attention is needed on whether futures prices can hold their footing, the position rollover of the most-traded SHFE lead contract, and the follow-through in spot transactions.
![Overnight SHFE and LME strengthened in tandem, SHFE lead 2611 contract closed up 0.74% [SMM Lead Morning Update]](https://imgqn.smm.cn/usercenter/EhsCj20251217171721.jpeg)
![SHFE lead 2611 contract reclaims the middle Bollinger Band, hitting a new post-holiday rebound high [Lead Futures Brief Comment]](https://imgqn.smm.cn/usercenter/xVUpr20251217171722.jpg)
