Since November 20, lead prices have fallen from highs. Both the most-traded SHFE 2401 contract and overseas LME lead have seen longs exit. In terms of domestic spot prices, SMM1# lead has also experienced ten consecutive days of declines. As of December 4, 2023, SMM1# lead has hit a new low in the past three months, at 15,700 yuan/mt.
In Q4, in terms of fundamentals, lead supply and demand have both dropped, and lead smelting costs have also dropped. Downstream consumption declined from the peak season, and supply from smelters have contracted due to shortage of raw materials and other factors.
Lead-acid battery scrap prices fell 200-300 yuan/mt recently, making lead price lose cost support.
Since the middle of last week, secondary refined lead prices in some regions have been close to or even exceeded primary lead prices.
Market normally believe that the price inversion between the two is an important signal of lead price rally on the horizon. Yet, the price rally failed to come. Lead prices continued to fall.
Primary refined lead supply is now ample in north China due to production recovery after maintenance, but supply is relatively tight in south China. Some secondary refined lead smelters may cut output to tackle raw material supply shortages.
After months of growth, LME lead stocks fell slightly to 139,300 mt as some warrants were cancelled.
SHFE lead price may not rebound until LME lead prices bottom out, in which case more lead ingots may be exported to overseas.
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