Downstream Enterprises Showed Lukewarm Purchase Willingness Before the Chinese New Year Holiday; Short-Term Lead Prices May Fluctuate Rangebound [SMM Lead Morning Meeting Summary]

Futures Market:

Overnight, LME lead opened at $1,970/mt, fluctuating rangebound during the Asian session. Entering the European session, LME lead first rose and then fell, reaching a high of $1,972/mt before plunging. With the US dollar index fluctuating at highs, LME lead faced pressure and dropped to a low of $1,928/mt, finally closing at $1,930.5/mt, down 2.13%.

Overnight, the most-traded SHFE lead 2502 contract opened lower with a gap at 16,680 yuan/mt, briefly touching a high of 16,690 yuan/mt at the beginning of the session. It fluctuated rangebound during the session, hitting a low of 16,625 yuan/mt and closing at 16,630 yuan/mt, down 0.72%.

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Spot Market Fundamentals:

In the Shanghai market, Chihong lead was quoted at 16,790-16,835 yuan/mt, with a premium of 50-80 yuan/mt against the SHFE lead 2502 contract. In Jiangsu and Zhejiang regions, JCC and Jinde lead were quoted at 16,740-16,800 yuan/mt, with a premium of 0-50 yuan/mt against the SHFE lead 2502 contract. SHFE lead remained rangebound, and suppliers followed the market trend in selling. Meanwhile, the circulation of secondary lead cargoes increased, and some suppliers, fearing price declines, lowered premiums against the SMM 1# lead average price. Mainstream cargoes were still quoted around a premium of 50 yuan/mt. Yesterday, premiums for primary lead cargoes self-picked up from smelting enterprises were reduced. Considering the Chinese New Year factor, suppliers actively quoted and sold, while downstream enterprises remained cautious and mostly purchased as needed.
Inventory: On January 8, LME lead inventory decreased by 4,200 mt to 230,500 mt, down 1.79%. As of January 6, the total social inventory of SMM lead ingots in five regions stood at 48,200 mt, down 4,900 mt from December 30 and down 4,600 mt from January 2.

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Lead Price Forecast for Today:

The US December ADP employment data recorded 122,000, below the market expectation of 140,000, marking the lowest level since August 2024. Initial jobless claims last week recorded 201,000, the lowest since the week of February 17, 2024. In China, two departments introduced 27 measures to expand and intensify the implementation of large-scale equipment upgrades and trade-in policies for consumer goods. China's lithium reserves have risen to the second-largest globally, with its share increasing from 6% to 16.5%.

As the Chinese New Year holiday approaches, additional lead smelting enterprises have suspended production for maintenance, tightening supply. Downstream battery producers have shown moderate stockpiling sentiment recently, and lead ingot suppliers generally reported pressure in transactions, with only some indicating moderate downstream purchasing willingness. As mid-January approaches, attention should be paid to whether stockpiling actions by downstream battery dealers can stimulate lead ingot purchases by battery producers. Overall, lead prices are likely to fluctuate rangebound in the short term.