[record of SMM lead internal morning meeting on June 4]

Summary of the lead morning meeting:

Macro:

It is reported that the global manufacturing industry fell into shrinking, IHS Markit of the global manufacturing PMI in May fell to 48.8; Morgan Stanley warned that investors underestimated the seriousness of the situation and that if Trump imposed tariffs on another $300 billion in Chinese goods and China retaliated, the global economy would fall into recession within nine months.

The ISM manufacturing index in May was 52.1, the lowest since October 2016, before US President Donald Trump won the election. In addition, the ISM data is still above the 50 rise and fall line, indicating that the US manufacturing industry is still expanding but slowing. The employment index was the lowest since 2017, the production index was the lowest since August 2016, and the import index fell below the line of prosperity and decline for two months in a row.

In May, the PMI final value of Markit manufacturing industry in the United States reached the lowest level since September 2009, the final value of output sub-index reached the lowest level since June 2016, and the final value of new order sub-index fell into the shrinking range for the first time since August 2009. After the data, U. S. stocks plunged, oil prices, the dollar fell, gold rose;

The chairman of the St. Louis Fed believes that global trade tensions and weak inflation in the United States have raised the risk of US economic growth, that the Fed's interest rate cut "may soon be guaranteed," and that, at the same time, The upside down of the three-month and 10-year key US Treasury yield curve also supports a rate cut to boost inflation; He was the first FOMC committee to make it clear that the Fed may soon have reason to cut interest rates;

China's Caixin manufacturing PMI50.2 was higher than expected in May, with good domestic and foreign demand but slightly slower production. This month's optimism fell sharply to its lowest level since data were available in April 2012, amid widespread fears that external trade problems would escalate and that forecasts for global demand were relatively low.

Yesterday, the central bank restarted and launched 80 billion yuan reverse repo operation, the market generally believes that this is a start; June liquidity supply and demand disturbance factors, there is a certain pressure, the central bank to give liquidity support there is no suspense, cut expectations rise again; However, the current monetary policy is still facing the problem of balancing multi-objectives, the choice of reverse buyback + medium-term lending convenience (MLF) is more likely.

Fundamentals:

The Shanghai lead consolidation situation continued, and the holders quoted prices with them. Among them, southern and Shuangyan lead in the Shanghai market quoted 60 to 80 yuan per ton of water for the 1906 contract, and Jinsha lead quoted 150 yuan per ton for the 1906 contract. Jijin lead in Jiangsu and Zhejiang markets quoted 60 to 80 yuan per ton of water for the 1906 contract, while the mainstream quotation for the bulk sheet of the original lead refinery offered an average price of 30 yuan per ton for SMM1# lead. In terms of recycled lead, the supply of reduced lead continues to be tight, and the shipping price of recycled refined lead is difficult to improve. The mainstream quotation of recycled refined lead is 50 yuan / ton to flat water factory from the mainstream quotation of recycled lead to the average price of SMM1# lead. The battery market consumption is poor, storage enterprises purchase on demand, at the same time, the recovery of renewable lead supply in some areas, rigid demand diversion signs, bulk market transactions are still relatively light.

In addition, due to the coexistence of maintenance and resumption of production, it is estimated that the primary lead production in June will affect 5 000 to 10 000 tons. The detailed data focus on the SMM production data released on Thursday, and focus on the recovery of recycled lead after environmental inspection this week.

Lead price:

The low amplitude of lead is narrowing day by day, and the short-term prediction is still dominated by consolidation. Since the middle of May, Shanghai lead has always been suppressed by the 20-day EMA pressure, so it is important to make an effective breakthrough in the future.

The price of SMM1# lead is expected to fall by 50 to 75 yuan per ton today.