Lead Smelters Stand Firm on Quotes, Downstream Enterprises Cautious in Procurement [SMM Lead Morning Comment]

Overnight, LME lead opened with a gap at $2,022.5/mt, fluctuated upward during the Asian session, and reached a high of $2,048/mt, boosted by destocking and increased long positions in the European session. It then plunged to a low of $2,018.5/mt before closing at $2,022.5/mt, up 0.22%.

Overnight, the most-traded SHFE lead 2501 contract opened at 17,185 yuan/mt, briefly touched a low of 17,170 yuan/mt at the beginning of the session, then fluctuated rangebound around the daily moving average, and finally closed at 17,190 yuan/mt, up 1.63%.

Macro side, the US 2/10-year Treasury yield curve inverted again for the first time in two months. The PBOC conducted a 900 billion yuan Medium-term Lending Facility (MLF) operation with a one-year term and an interest rate of 2.00%, unchanged from the previous rate. The Head of the Treaty and Law Department of the Ministry of Commerce of China answered reporters' questions regarding the EU's bringing China's temporary anti-dumping measures on EU brandy to the WTO dispute settlement mechanism: China has received the EU's request for consultations and will handle it in accordance with relevant WTO rules.

Fundamentals, recently, lead smelters have frequently reduced or halted production due to smog, mainly affecting secondary lead smelters in Hebei and Anhui. This week, the smog warnings in Anhui and other regions were lifted, and the resumption of production needs to be monitored. Additionally, primary lead smelters in Jiangxi and Guangdong entered maintenance this week, further reducing lead ingot supply, while downstream enterprises continued to consume social warehouse inventory. Due to the limited circulation of lead ingots, lead smelters stood firm on quotes, especially as the price spread between secondary refined lead and primary lead was minimal, with some regions even quoting 50-100 yuan/mt higher than primary lead ex-factory. Overall, lead prices are likely to fluctuate at highs in the short term.