Rising Inventory Buildup Pressure for Lead Ingots, Beware of Lead Price Jumping Initially and Then Pulling Back [SMM Lead Morning Comment]

Last Friday, LME lead opened at $2,031.5/mt. During the Asian session, it briefly touched a low of $2,030/mt before fluctuating upward. As shorts continued to reduce positions, it reached a high of $2,070/mt in the European session. By the end of the session, LME lead jumped initially and then pulled back, closing at $2,038.5/mt, up 0.07%, recording a small positive candlestick with a long upper shadow.

Last Friday night, the most-traded SHFE lead 2412 contract opened at 16,885 yuan/mt. At the beginning of the session, it briefly touched a high of 16,945 yuan/mt. As bulls reduced positions, SHFE lead plummeted to a low of 16,690 yuan/mt, finally closing at 16,760 yuan/mt, up 0.42%.

Macro side, the US added 12,000 non-farm jobs in October, marking the smallest increase since December 2020. Traders increased their bets on a 25 basis point interest rate cut by the US Fed next week. The Caixin China Manufacturing PMI for October recorded 50.3, up 1 percentage point from September, returning to expansion territory. The Chinese Ministry of Commerce stated that it would introduce a batch of new policies in the consumer sector in collaboration with relevant departments.

Fundamentally, as northern regions begin winter heating, areas such as Henan, Hebei, and Anhui have successively issued air pollution warnings. Related regions have imposed vehicle restrictions, and lead smelters have reduced or halted production. The expected supply reduction may support lead prices to fluctuate upward. However, the current social inventory of lead ingots is on the rise. With the delivery of the SHFE lead 2411 contract scheduled for November, inventory buildup pressure from holders transferring stocks to warehouses will increase, so beware of lead prices jumping initially and then pulling back.