Overseas Coincides with Christmas, Domestic Lead Trading Still Focuses on Fundamentals [SMM Lead Morning Meeting Notes]

Futures Market:

Overnight, LME lead opened at $1,983.5/mt. Against the backdrop of continued destocking of lead ingots, LME lead fluctuated upward, breaking through the $2,000/mt threshold during the day and reaching a weekly high of $2,006/mt. However, with the US dollar index surging strongly overnight, base metals came under pressure and pulled back, with LME lead quickly retreating to around $1,980/mt before closing at $1,993/mt, up 0.61%. Additionally, as today is Christmas Eve, the LME will close at 20:30 tonight.

Overnight, the most-traded SHFE lead 2502 contract opened at 17,415 yuan/mt. Despite production cuts on the supply side, lead warehouse warrant inventory unexpectedly increased. SHFE lead initially dropped to 17,370 yuan/mt but later rebounded as the market continued to trade on supply-side environmental protection-driven production restrictions, moving above 17,400 yuan/mt and eventually closing at 17,485 yuan/mt, down 0.09%. Open interest stood at 61,421 lots, down 694 lots from the previous trading day.

》Click to View SMM Lead Spot Historical Prices

Spot Market Fundamentals :

Yesterday in the lead spot market, smog warnings resurfaced in Anhui, Henan, and other regions, raising expectations of supply tightening. SHFE lead surged strongly, while suppliers, with limited inventories, stood firm on quotes and shipped cautiously. Downstream enterprises adopted a wait-and-see sentiment, with only a few making just-in-time procurement, leading to sluggish transactions in the spot order market. For primary lead, smelters with limited inventories mostly stood firm on quotes, with spot order quotations against the SMM 1# lead average price at premiums of 50-250 yuan/mt ex-factory. In mainstream trade markets such as Jiangsu, Zhejiang, and Shanghai, mainstream quotations for domestic lead were on par with the SHFE lead 2501 contract. For secondary refined lead, major production areas issued smog warnings again, reducing smelter shipments. Quotations for secondary refined lead were at discounts of 25 yuan/mt to premiums of 150 yuan/mt against the SMM 1# lead average price ex-factory.

In terms of inventory, according to the SMM survey, as of December 23, total social inventory of lead ingots across five regions stood at 56,200 mt, down 2,400 mt from December 16 and 2,300 mt from December 19.

》Click to View SMM Metal Industry Chain Database

Lead Price Forecast for Today:

Macro Side, China's Premier stated that next year, the country's economic and social development will still face many difficulties and challenges. Efforts should be made to seize time against various uncertainties, and for confirmed tasks, the earlier the better, accelerating progress to continuously consolidate the momentum of economic recovery and improvement. Additionally, Japan's Honda officially initiated merger talks, planning to complete the merger by 2026, which would make it the third-largest globally. Meanwhile, Germany's Volkswagen reached a compromise with labor unions, promising not to close factories but to comprehensively reform its German operations and cut 35,000 jobs.

Fundamentally, recent smog warnings have been issued in Anhui, Henan, Hebei, and other regions, while Hunan is undergoing environmental protection inspections. Both primary and secondary lead enterprises have experienced production cuts or suspensions, tightening lead ingot supply and prompting downstream enterprises to turn to social warehouse inventories for just-in-time procurement, leading to an accelerated decline in lead ingot social inventory. Yesterday, smog warnings were reissued in Anhui, Henan, and other regions, affecting production and transportation at lead smelting enterprises to varying degrees. Meanwhile, as the year-end approaches, large enterprises are about to close accounts and take inventory, reducing downstream procurement enthusiasm. Market transactions are likely to remain sluggish.