Domestic Ingot Supply Remains Tight, Lead Prices May Rebound After Hitting Lows [SMM Lead Morning Comment Dec 23]

Last Friday, LME lead opened at $1,956/mt. During the Asian trading session, the market saw sluggish trading, with LME lead fluctuating mostly between $1,965-1,975/mt. Entering the European session, the US dollar index fell consecutively, while LME lead inventory dropped by nearly 3,000 mt to the lowest level in a month. LME lead then fluctuated upward, reaching a high of $1,990/mt and finally closing at $1,981/mt, up 0.41%.

Last Friday, the most-traded SHFE lead 2502 contract opened at 17,445 yuan/mt. With lead ingot destocking and refinery resumption expectations coexisting, the market saw a tug-of-war between bulls and bears, with SHFE lead mostly trading between 17,375-17,425 yuan/mt before finally closing at 17,405 yuan/mt, up 0.29%. Its open interest stood at 60,941 lots, down 70 lots from the previous trading day.

Macro side, China's December LPR remained unchanged for two consecutive months. The industry expects stronger monetary policy adjustments next year, with room for further RRR cuts and interest rate cuts. Several US Fed officials support data-dependent and cautious rate cuts next year. Powell's "dovish ally" Daly made a rare hawkish statement, while Goolsbee expects "considerable" room for rate cuts over the next year. The US Congress passed a short-term spending bill at the last minute with a large majority, avoiding a government shutdown and excluding the debt ceiling content advocated by Trump.

Fundamentals side, frequent environmental protection impacts in regions such as Henan, Anhui, and Hunan have affected lead ingot production and transportation to varying degrees, tightening regional supply and pushing spot premiums higher. However, futures trading was weighed down by factors such as the lifting of smog warnings in Anhui and lead ingot import expectations. Moving forward, we need to pay closer attention to lead ingot destocking trends.