Consumption Below Expectations, Lead Ingot Inventory Accumulates Again; Short-term Lead Prices May Show Weak Fluctuations

SMM, Aug 14: Overnight, LME lead opened at $2,040/mt. The cooling of US inflation supported rate cut bets, but at the same time, market concerns about economic recession resurfaced. LME lead showed a downward trend throughout the day, giving back the gains of the previous two days, reaching a low of $1,984.5/mt and finally closing at $1,985/mt, down 2.34%. Overnight, SHFE lead warrant inventory increased, coupled with news of downstream production cuts. The main SHFE lead 2409 contract opened lower at 17,705 yuan/mt, and the decline expanded after the opening, once falling to 17,350 yuan/mt. In the latter part of the trading session, the tug-of-war between bulls and bears intensified, with SHFE lead consolidating around 17,400 yuan/mt and finally closing at 17,450 yuan/mt, down 3.24%. Its open interest was 76,017 lots, a decrease of 2,624 lots from the previous trading day.

Macro side, the US July PPI fell more than expected, with the YoY increase narrowing to 2.2%, and service costs declining for the first time this year. The cooling inflation supported rate cut bets, with market bets on a 50 basis point rate cut by the US Fed in September exceeding 50% again. In China, new social financing in July was 770 billion yuan, new RMB loans were 260 billion yuan, M1 decline expanded to 6.6%, and M2 growth improved compared to the previous month.

Fundamentals side, domestic and international lead ingot inventories diverged. With the SHFE lead delivery approaching, SHFE lead warrant inventory continued to rise, while some medium and large lead-acid battery companies took high-temperature holidays and reduced production, dragging down lead price again. We need to pay attention to the willingness of holders to ship and whether spot discounts will narrow, but before lead consumption materializes, lead prices are expected to show weak fluctuations.