Overnight Lead Prices Stabilized, Holders Continued to Transfer Inventory Awaiting Delivery [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,073.5/mt, fluctuated downward during the Asian session, and continued to decline in the European session, reaching a low of $2,045.5/mt. It then rose amid a general increase in base metals, finally closing at $2,074/mt, down $2/mt, a decrease of 0.1%.

Overnight, the most-traded SHFE lead 2411 contract started at a low of 16,525 yuan/mt, fluctuated upward to a high of 16,740 yuan/mt, and slightly dropped back before closing, finally settling at 16,680 yuan/mt, up 100 yuan/mt, an increase of 0.60%.

Macro side, after the release of US CPI data, expectations for an interest rate cut heated up again, leading to a general rebound in LME base metals. Yesterday, the People's Bank of China decided to establish the "Securities, Funds and Insurance companies Swap Facility (SFISF)," with an initial operation scale of 500 billion yuan, which can be further expanded as needed, providing a temporary boost to the financial market. Additionally, the market is widely focused on the domestic fiscal stimulus plan to be announced on Saturday. Fundamentals side, after the holiday, SHFE lead jumped initially and then pulled back, with holders actively selling. The ex-factory transaction price of refinery-sourced goods weakened, and yesterday, the spread between futures and spot prices widened to 300 yuan/mt (a discount of 300 yuan/mt to the SHFE lead 2411 contract ex-factory). With only three working days left until the delivery date of the SHFE lead 2410 contract, holders continued to transfer lead ingots to delivery warehouses, and social inventory of lead ingots may continue to increase. Entering October, primary lead smelters resumed production after maintenance, gradually increasing market supply. Although the automotive battery sector enters its peak season, replacing the electric vehicle replacement sector as the new focus of lead consumption in October, SMM assesses that short-term lead market supply may exceed consumption. Regarding secondary refined lead, mid-October will see environmental inspections in Anhui. With high battery scrap prices and severe losses in secondary lead smelting, unexpected production cuts or suspensions may occur, potentially easing the pressure on lead ingot inventory accumulation, with cost support for lead prices remaining adequate.