Recurring Geopolitical Issues to Drive Lead Prices Closer to Fundamentals [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,961.5/mt. Boosted by ceasefire news in the Middle East, base metals mostly rose. Meanwhile, lead ingot inventories outside China gradually destocked, and LME lead fluctuated upward. Especially during the European session, LME lead once surged to $19,773.5/mt, a high not seen in nearly one and a half months. Toward the close, LME lead gave back some gains, ultimately settling at $1,959/mt, down 0.18%.

Overnight, the most-traded SHFE lead 2605 contract opened at 16,820 yuan/mt. At the start of the session, bulls were strong, and SHFE lead attempted to approach 16,900 yuan/mt. However, lead ingot inventory buildup in China intensified the tug-of-war between longs and shorts. In the latter half of the trading session, SHFE lead gradually gave back some gains, ultimately closing at 16,760 yuan/mt, up 0.24%. Open interest stood at 43,636 lots, a decrease of 2,256 lots from the previous trading day.

On the macro front:

Last Friday, US President Trump confirmed that Iran had opened the Strait of Hormuz, declaring the strait situation over. However, the situation reversed over the weekend. Iran fired again to force back oil tankers, re-blocking the Strait of Hormuz less than 24 hours after announcing its opening, accusing the US of violating its commitment by not lifting the maritime blockade on Iran. Trump convened a "situation room meeting," threatening to resume bombing if the ceasefire expired. Subsequently, Trump stated that a US delegation would arrive in Islamabad for negotiations, that Iran had "seriously violated" the ceasefire, but that a US-Iran deal was still achievable. The White House said Vance would participate in the talks. Iranian media reported that Iran refused to participate in a second round of talks with the US, that reports of a "second round" of US-Iran talks in Islamabad were untrue, that the negotiation outlook remained unclear, and that there would be no talks as long as the maritime blockade continued. Trump said the US military forcibly intercepted and seized an Iranian cargo ship in the Gulf of Oman. The Iranian military responded that it had launched drones in retaliation. US Fed Governor Waller stated that if the Middle East war ended quickly, interest rate cuts could still continue.

:

Last Friday in the lead spot market, warrant-based circulating cargoes in Jiangsu, Zhejiang, Shanghai were still scarce, with few quotations. Suppliers mainly shipped cargoes self-picked up from primary lead smelter production sites. Following the previous day's lead price surge, SHFE lead gave back most of its gains on the day. Some suppliers' quotations remained relatively firm, with quoted discounts narrowing. Mainstream origin quotations against SMM #1 lead ranged from discounts of 25 yuan/mt to premiums of 100 yuan/mt ex-works. Secondary lead side, smelters' shipment enthusiasm declined, and quotations decreased notably. Secondary refined lead was quoted at discounts of 50-0 yuan/mt against SMM #1 lead average price ex-works, with discounts of 75 yuan/mt in individual regions. Additionally, downstream lead-acid battery enterprises only made just-in-time procurement, and given the large lead price fluctuations, short-term procurement was mainly through long-term contracts.

Inventory: As of April 17, LME lead inventory decreased by 1,375 mt from the previous day to 274,250 mt. SHFE lead ingot warrant inventory stood at 60,962 mt, an increase of 4,441 mt from the previous trading day.

Lead price forecast for today:

Recently, China's lead-acid battery market was in the off-season, and lead ingot inventory rose, serving as a strong bearish factor for lead prices. In mid-to-late April, maintenance among secondary lead enterprises increased, and the import window for lead (refined lead) narrowed, with supply relatively tightening, offsetting part of the consumption decline. Lead prices are expected to continue their volatile trend.

Data source disclaimer: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.