Macro Recovery Combined With Consumption Expectations Ends Lead Prices' Downward Fluctuation [SMM Analysis]

In early January, lead prices weakened for several consecutive days but rebounded and stabilized this week. On the fundamentals side, several smelters reported early pick-up and settlement of refined lead long-term contracts in January. This week marked the final week for downstream pre-holiday inventory buildup before the Chinese New Year. As the weekend approached, regular holiday shutdown and maintenance plans for refined lead smelting and downstream battery production were gradually announced. Starting next week, the lead industry chain is expected to enter a phase of simultaneous supply and demand decline, with a growing festive atmosphere.

On Friday (January 17, 2025), domestic macro data provided a bullish boost, driving a broad rally in non-ferrous metals. Additionally, expectations of some downstream battery enterprises resuming production in February temporarily supported lead prices. Under this sentiment, the most-traded SHFE lead 2402 contract surged to 16,780 yuan/mt. However, in the spot market, high premiums hindered transactions. With smelters increasing early pick-up of long-term contracts, circulating supply remained tight, and downstream transactions were limited to small-scale rigid demand.

Furthermore, this week, downstream enterprises actively picked up goods and placed orders for next week's pre-sold supplies. Although downstream operations are primarily suspended for the Chinese New Year holiday, many battery enterprises generally anticipate a minor post-holiday production and sales peak, with some enterprises expecting to resume production early after the holiday. Next week, the lead market will enter a phase of simultaneous supply and demand decline. Moving forward, attention should be paid to the expected inventory buildup at smelters during the holiday and the actual progress of downstream resumption of production and operations.

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