Macro Policies Strongly Support Fundamentals, Lead Prices May Fluctuate Upward [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,054.5/mt. Against the backdrop of lead ingot destocking, coupled with favorable Chinese macro policies, the overall operating focus of LME lead gradually shifted upward, reaching a peak of $2,094.5/mt during the session. By the close, LME lead slightly retreated, finally settling at $2,080.5/mt, up 1.44%.

Overnight, the most-traded SHFE lead 2410 contract opened higher at 16,750 yuan/mt. After the opening, SHFE lead's gains slightly receded, but domestic macro policy continued to ferment, with SHFE lead fluctuating upward, reaching 16,780 yuan/mt, a one-week high. By the close, SHFE lead finally settled at 16,660 yuan/mt, up 0.24%. The open interest was 21,191 lots, down 2,023 lots from the previous trading day.

Macro side, the PBoC made significant moves: RRR cuts, interest rate cuts, reduction of existing mortgage rates, and the introduction of monetary tools to support the stock market. PBoC Governor Pan Gongsheng announced five policy measures to support real estate. The National Development and Reform Commission stated that government bond funds will drive the renewal of over 2 million units of equipment. Additionally, US media reported: Hezbollah in Lebanon demanded Iran attack Israel; Israeli military launched a new round of airstrikes on Hezbollah, claiming to have killed the head of Hezbollah's missile project; Hezbollah attacked Israeli military bases; Lebanese authorities pled with the US to stop Israel.

Fundamentally, with the National Day holiday approaching, downstream lead-acid battery companies are arranging holiday schedules and conducting necessary lead ingot stocking. Meanwhile, primary and secondary lead smelters are actively shipping, with some holders expanding discounts to sell. Lead smelters' finished product inventories and SHFE lead warehouse warrant inventories are both trending downward. In the short term, although pre-holiday stocking by downstream companies is weaker than the same period last year, stocking consumption expectations are evident. Coupled with favorable macro policies, lead prices will continue to show a fluctuating upward trend.