Lead Prices Continue Downward Trend, Awaiting Consumption Realization [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,044.5/mt. During the Asian session, it was dragged down by weak SHFE lead, showing a downside potential. Entering the European session, LME lead inventories declined again, leading to a rebound in LME lead, which reached a high of $2,070/mt. In the latter part of the trading session, the market was in a tug-of-war between bulls and bears, and LME lead finally closed at $2,062/mt, down 0.27%.

Overnight, SHFE lead warehouse warrant inventories increased. The most-traded SHFE lead 2410 contract opened lower at 17,090 yuan/mt. With lead consumption expectations still present, SHFE lead rebounded from its lows and rose back above 17,200 yuan/mt, finally closing at 17,240 yuan/mt, down 0.69%. Its open interest reached 56,460 lots, an increase of 419 lots from the previous trading day.

Macro aspects: The State Council issued opinions to promote high-quality development of service trade, supporting the development of cross-border trade financing and refinancing in RMB, expanding the cross-border use of RMB in the service trade sector, and fully implementing the negative list for cross-border service trade. China's Caixin Manufacturing PMI for August rebounded to 50.4, returning to expansion, with new orders recovering. Additionally, Volkswagen is considering closing its factory in Germany for the first time in history to further cut costs.

Fundamentals: The "trade-in" policy for electric bicycles and cars still requires a certain transmission period to benefit lead consumption. Currently, lead consumption is weak, market supply is relatively ample, and downstream enterprises have more purchasing options. Therefore, lead ingot inventory depletes slowly. Even with some smelters undergoing maintenance, social inventory of lead ingots continues to rise. In the short term, lead prices will continue to have downside potential, awaiting subsequent consumption realization.