Supply-Demand Imbalance Not Prominent; Future Lead Prices Need to Focus on Secondary Lead Supply [SMM Lead Morning Comment Dec 4]

Overnight, LME lead opened at $2,073/mt, fluctuating upward throughout the day, mostly between $2,060-2,070/mt. By the end of the session, LME lead surged to a new three-month high of $2,084/mt before closing at $2,073/mt, down 0.41%.

Overnight, the most-traded SHFE lead 2501 contract opened at 17,430 yuan/mt. With an increase in lead warehouse warrant inventory, SHFE lead initially dipped to 17,405 yuan/mt. However, due to the longs and limited ingot supply, SHFE lead gradually rebounded to around 17,600 yuan/mt in the latter half of the trading session, finally closing at 17,590 yuan/mt, down 0.14%. Its open interest was 57,952 lots, a decrease of 718 lots from the previous trading day.

Macro side, China's Ministry of Commerce announced that, in principle, it will not permit the export of gallium, germanium, antimony, and related dual-use superhard materials to the US. South Korean President Yoon Suk-yeol declared a "state of emergency" late at night, causing a sharp drop in the Korean won and stocks, and a plunge in the Korean cryptocurrency market. The emergency order, which lasted over six hours, was lifted, and the Korean stock market opened as usual on Wednesday, with the government stating it would provide "unlimited liquidity" if necessary to stabilize the market. The French government faces a critical moment, with a no-confidence vote in parliament possibly taking place as early as Wednesday. US-Canada tensions escalated: Trump reportedly "rebuked" Trudeau, saying Canada might as well become the 51st state of the US if it cannot survive with tariffs.

Fundamentally, primary and secondary lead smelting enterprises are undergoing both maintenance and recovery, while lead consumption expectations remain limited, resulting in no significant supply-demand imbalance for lead ingots. Meanwhile, SHFE lead rise has far outpaced the fundamentals, with the spread between futures and spot prices gradually widening in recent days. As of yesterday, mainstream delivery brand quotations were at a discount as low as 300 yuan/mt against the SHFE 2501 contract, with suppliers showing increased willingness to deliver into warehouses. Lead warehouse warrant inventory has shown a buildup trend. Moving forward, we need to continue monitoring the contribution of secondary lead enterprises' resumption and the price difference between primary lead and secondary lead.