Divergent Trading Logic in and Outside China, LME Outperforms SHFE for Lead Prices [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,958/mt. The US dollar index surged then pulled back, and combined with continued destocking of lead ingots outside China, LME lead fluctuated upward throughout the day, gradually moving from $1,950/mt toward $1,970/mt, hitting an intraday high of $1,975/mt, once again refreshing the nearly one-and-a-half-month high, before finally closing at $1,974/mt, up 0.59%.

Overnight, the most-traded SHFE lead 2605 contract opened at 16,710 yuan/mt. Boosted by LME lead's rally, SHFE lead also recovered from yesterday's afternoon decline after the opening and moved above 16,800 yuan/mt, ultimately closing at 16,810 yuan/mt, up 0.27%. Its open interest stood at 39,237 lots, down 1,830 lots from the previous trading day. Recently, positions in the SHFE lead 2605 contract have been gradually rolled over to the 2506 contract; attention should be paid to the change of the most-traded contract.

On the macro front:

US President Trump said the US-Iran talks were scheduled for April 21 and that a ceasefire extension was "nearly impossible" if no deal was reached, and the blockade on Iran would not be lifted before a deal was reached. Iran did not confirm attendance; Iranian media said the decision not to participate in the talks remained unchanged. Iran's Supreme Leader reiterated three fundamental positions, including war reparations and entering a new phase of Strait of Hormuz management. Iran's parliament speaker said negotiations under the shadow of threats were unacceptable. US media reported that Iranian representatives planned to travel to Pakistan to negotiate with the US. Kuwait announced "force majeure" on crude oil and refined product exports, as the Hormuz blockade triggered a chain reaction.

:

Yesterday in the lead spot market, circulating cargoes in the Jiangsu, Zhejiang, Shanghai market were limited. Suppliers held prices firm and shipped at premiums. Primary lead smelter cargoes self-picked up from production site were also quoted higher, with mainstream production areas quoted at premiums of 0-50 yuan/mt against SMM #1 lead ex-works, with premiums exceeding 100 yuan/mt in some regions. Secondary lead side, many smelters were under maintenance, market cargoes were limited and quoted on the high side. Secondary refined lead was quoted at discounts of 50-0 yuan/mt against SMM #1 lead average price ex-works, with premiums of 25 yuan/mt in some regions. Downstream enterprises had limited demand, with some mainly purchasing under long-term contracts and some purchasing spot orders on an as-needed basis. Spot market transactions were moderate.

Inventory: As of April 20, LME lead inventory decreased by 625 mt from the previous day to 273,625 mt. SMM lead ingot social inventory across five regions continued its upward trend.

Today's Lead Price Forecast:

Recently, lead ingot inventory in markets outside China continued destocking, and spot lead premiums in Southeast Asia rose, becoming the main factor supporting lead prices. Meanwhile, lead smelters in major secondary lead production areas in China were concentrated in maintenance, tightening lead ingot supply regionally, which offset part of the impact of the lead-acid battery market off-season, and the lead ingot inventory buildup trend slowed down. Additionally, according to the latest customs data, total lead ingot imports in March were nearly 50,000 mt, of which refined lead imports were approximately 25,000 mt, while lead-acid battery exports were 12.0564 million units, down 17.37 percentage points MoM, resulting in a supply-demand mismatch of lead ingots in China that made it difficult to support a significant rise in domestic lead prices in the short term.

Data Source Disclaimer: Data other than publicly available information is derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.