Supply increase exceeds demand and macro factors pressure base metals; short-term lead price trend is weak [SMM Lead Morning Comment]

Overnight, LME lead opened at $2,090/mt, fluctuated upward after the opening, peaked at $2,102.5/mt during the European session, but weakened due to market concerns over downstream consumption and a stronger US dollar index. It dipped to $2,065/mt at the end of the session and closed at $2,068.5/mt, down 0.79%.

Overnight, the most-traded SHFE lead 2411 contract opened at 16,595 yuan/mt, briefly touched a high of 16,675 yuan/mt at the beginning of the session, then fluctuated downward due to long position reductions, hitting a low of 16,555 yuan/mt, and finally closed at 16,570 yuan/mt, down 0.9%.

Macro side, the European Central Bank cut interest rates by 25 basis points again, lowering the deposit facility rate from 3.5% to 3.25%. US retail sales in September slightly exceeded expectations, reinforcing the expectation of a 25 basis point interest rate cut by the US Fed. Several major Chinese banks started to lower deposit rates again from today, with some major banks reducing the listed rate for term deposits by 25 basis points. Ding Xuexiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, emphasized during his research in Henan and Jiangsu: intensifying efforts to implement existing policies and a package of incremental policies to strive to achieve the annual economic and social development goals.

Fundamentally, due to the delivery of the SHFE lead 2410 contract this week, social inventory of lead ingots increased significantly. Additionally, both primary and secondary lead smelters increased production this week (resuming production after maintenance and new capacity coming online), leading to a temporary increase in lead ingot supply. During this period, although some smelters underwent unexpected maintenance and there were environmental inspections in Anhui, the ample supply of lead ingots remained unchanged. Currently, both supply and demand in the lead market have increased, but as the supply increase exceeds demand and macro factors pressure base metals, the short-term lead price trend is weak.