Domestic Supply-Side Production Cuts Fully Priced In, Lead Prices Show Weak Consolidation [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,987.5/mt. Trading was sluggish on the eve of Christmas. During the session, base metals generally rose as China, the largest consumer, introduced additional fiscal stimulus measures. LME lead also attempted to reach the $2,000/mt mark but failed, and later trading showed a fluctuating downward trend. It eventually closed at $1,980/mt, down 0.65%. Additionally, today is the Christmas holiday, and the LME is closed.

Overnight, the most-traded SHFE lead 2502 contract opened at 17,400 yuan/mt. Near year-end, market trading turned sluggish, with SHFE lead trading volume shrinking significantly and open interest decreasing daily. On the supply side, environmental protection measures still had an impact, but lead warehouse warrant inventory remained stable. With previous bullish factors exhausted, SHFE lead showed a weak consolidation trend, fluctuating mostly between 17,350-17,400 yuan/mt during the session. It finally closed at 17,355 yuan/mt, down 0.4%, with open interest at 57,980 lots, a decrease of 1,240 lots from the previous trading day.

Click here to view SMM lead spot historical quotations.

Spot Market Fundamentals :

Yesterday in the lead spot market, SHFE lead fluctuated downward. On the supply side, environmental protection measures still had an impact, and some suppliers had sold out their December inventory, resulting in limited spot market availability. Suppliers stood firm on quotes, generally shipping at premiums against the SMM 1# lead average price. Meanwhile, secondary lead smelters increased their shipments, with secondary refined lead quoted at discounts of 50 yuan/mt to premiums of 50 yuan/mt against the SMM 1# lead average price on an ex-factory basis. Downstream enterprises preferred secondary lead sources, and the trading in the primary lead market remained sluggish. For primary lead, smelters had limited inventory and mostly stood firm on quotes, with spot orders quoted at premiums of 100-300 yuan/mt against the SMM 1# lead average price on an ex-factory basis. In mainstream trade markets such as Jiangsu, Zhejiang, and Shanghai, domestic lead mainstream quotations were at premiums of 0-20 yuan/mt against the SHFE 2501 contract. For secondary lead, production restrictions in major producing areas persisted, and smelters shipped according to market trends, with shipments increasing compared to the previous day. Secondary refined lead was quoted at discounts of 50 yuan/mt to premiums of 50 yuan/mt against the SMM 1# lead average price on an ex-factory basis.

Click here to view the SMM metal industry chain database.

Lead Price Forecast:

Macro side, China's Ministry of Finance announced that in 2025, it will focus on expanding domestic demand, appropriately increasing basic pensions for retirees, raising fiscal subsidies for urban and rural residents' medical insurance, increasing the fiscal deficit ratio, and arranging for larger-scale government bonds. The NDRC stated that it will further standardize the implementation of new government and social capital cooperation projects, prioritizing private enterprises' participation.

Fundamentally, the overseas market is temporarily stagnant due to the Christmas holiday. The domestic market, also at year-end, saw continued environmental protection impacts on smelters in regions such as Hunan and Anhui. However, consumption remained weak as some large downstream enterprises closed accounts and conducted inventory checks at year-end, leading to reduced lead ingot procurement. As a result, the lead spot market showed limited shipments, high prices, and poor transactions. Lead prices are expected to remain in a consolidation trend in the short term.