For Lead Prices, Continue to Focus on Pre-Holiday Stocking [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,048.5/mt. During the Asian session, LME lead consolidated around $2,040/mt. Entering the European session, the focus of LME lead gradually shifted upward, reaching an intraday high of $2,067/mt boosted by the rise in SHFE lead. By the end of the session, LME lead gave back some gains, closing at $2,051/mt, up 0.44%.

Overnight, SHFE lead warehouse warrant inventory decreased by over 10,000 mt. The most-traded SHFE lead 2410 contract opened higher at 16,530 yuan/mt, rising above 16,600 yuan/mt, and later consolidating between 16,620-16,665 yuan/mt, finally closing at 16,645 yuan/mt, up 1.46%. Its open interest was 25,541 lots, down 4,418 lots from the previous trading day. Additionally, the open interest of the SHFE lead 2410 contract has been gradually shifting to the SHFE lead 2411 contract, noting the rollover of the most-traded contract.

Macro side, the US September Markit Manufacturing PMI hit a 15-month low, with the service sector expansion slowing and price pressures re-emerging. Expectations for an ECB rate cut are rising, with the Eurozone September Manufacturing PMI hitting a new low for the year and both Germany and France seeing accelerating contraction. Today, the State Council Information Office held a press conference attended by Pan Gongsheng, Li Yunze, and Wu Qing. The central bank announced a recent RRR cut of 0.5 percentage points, with another cut of 0.25-0.5 percentage points possible by year-end, lowering the central bank policy rate. The 7-day reverse repurchase interest rate was cut by 0.2 percentage points, and mortgage rates on existing home loans are expected to decrease by about 0.5 percentage points to a level similar to those of newly issued housing loans. The minimum down payment ratio for second-home loans was reduced from 25% to 15%.

Fundamentals, in late September, maintenance at primary and secondary lead smelters gradually ended, with lead ingot production stable to rising, while lead consumption was mediocre. Downstream enterprises showed less enthusiasm for pre-holiday stocking compared to the same period last year. Meanwhile, the retirement volume of battery scrap was limited, with prices remaining high, even rising instead of falling. Secondary lead companies held firm on prices, with regions like Anhui and Henan seeing secondary refined lead prices surpassing primary lead prices, causing a price inversion. Changes in the price spread may cause downstream enterprises' rigid demand to return to the primary lead sector. Additionally, this week is the week before the National Day holiday, and downstream enterprises may conventionally conduct pre-holiday stocking, with continued attention to the fulfillment of pre-holiday stocking.