Consumption Performance After New Year's Day Was Average; Recent Lead Price Trends Focus on Downstream Stockpiling Actions Before Chinese New Year [SMM Lead Morning Meeting Summary]

Futures Market:

Last Friday, LME lead opened lower with a gap at $1,937/mt. During the Asian session, it briefly touched a high of $1,937.5/mt before fluctuating downward. Due to the high-level fluctuation of the US dollar index, LME lead came under pressure during the European session, hitting a low of $1,920/mt and finally closing at $1,921/mt, down 0.65%.

Last Friday night, the most-traded SHFE lead 2502 contract opened at a low of 16,615 yuan/mt. After briefly touching a high of 16,760 yuan/mt at the beginning of the session, it fluctuated around the intraday moving average and finally closed at 16,690 yuan/mt, down 0.21%.

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Spot Fundamentals :

In the Shanghai market, Chihong lead was quoted at 16,770-16,815 yuan/mt, with a premium of 80-100 yuan/mt against the SHFE lead 2502 contract. In Jiangsu and Zhejiang regions, JCC and Jinde lead were quoted at 16,740-16,800 yuan/mt, with a premium of 50-80 yuan/mt against the SHFE lead 2502 contract. The center of SHFE lead shifted downward, and suppliers showed moderate enthusiasm for shipments. Meanwhile, smog warnings were reactivated in Henan and Anhui regions, limiting some primary and secondary lead smelting production and lead ingot transportation. Primary lead smelters reduced their quotations and raised premiums (against the SMM 1# lead average price), while secondary lead quotations significantly decreased. Downstream enterprises maintained a strong wait-and-see sentiment, with some making just-in-time procurement.

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Lead Price Forecast Today:

Macro side, PBOC: Implement a moderately loose monetary policy, cut RRR and interest rates at an appropriate time, and firmly prevent excessive exchange rate adjustments. NDRC: By 2025, increase the issuance scale of ultra-long-term special government bonds and expand the support scope for the "two major" initiatives. China's State Administration of Foreign Exchange: Implement more proactive and effective foreign exchange management policies, strengthen counter-cyclical adjustments in the foreign exchange market, and manage expectations.

Spot fundamentals, supply side, environmental protection impacts vary regionally, leading to significant differences in lead ingot supply across regions. Additionally, battery scrap prices are more likely to rise than fall, making premium trading the norm in the spot market. On the consumption side, post-New Year consumption has been average, and pre-Chinese New Year restocking expectations have yet to materialize. Coupled with expectations for production cuts among large downstream enterprises, the market is showing a weak supply and demand pattern. After the decline in lead prices, attention should be paid to the realization of secondary lead costs and downstream pre-Chinese New Year restocking expectations.