Futures Market:
Overnight, LME lead opened at $1,993/mt. During the Asian trading session, the market saw sluggish trading, with LME lead fluctuating between $1,985-2,000/mt. Entering the European session, LME lead inventory continued to decline, coupled with the US dollar index dropping to a three-month low, leading to a general strengthening of base metals. LME lead reached a high of $2,014.5/mt and eventually closed at $2,012.5/mt, up 0.9%.
Overnight, the most-traded SHFE lead 2504 contract opened at 17,290 yuan/mt. Driven by the rise in LME lead, SHFE lead surged strongly at the beginning of the session, breaking through the 17,300 yuan/mt resistance level and reaching a high of 17,330 yuan/mt, the highest level this year. However, with increased domestic market supply and lingering inventory buildup risks, SHFE lead pulled back after the surge and finally closed at 17,240 yuan/mt, up 0.12%. Its open interest stood at 45,680 lots, down 675 lots from the previous trading day.
》Click to View SMM Lead Spot Historical Prices
Macro Perspective: China firmly opposes the US tariff hikes on Chinese goods and has issued nine rounds of countermeasures, including lawsuits, tariff hikes, and export control listings. China imposed additional tariffs of 10% and 15% on certain US imports, including chicken, corn, and soybeans. The Chinese Ministry of Commerce has listed 15 US entities under export control measures. Concerns over the impact of Trump's tariffs on global economic growth have led the market to bet on three interest rate cuts by the US Fed this year. The US Fed's "third-in-command" stated that they are beginning to consider the impact of tariffs on prices and see no need to adjust policies at present. Additionally, starting this Tuesday, the US imposed a 25% tariff on Canadian goods. In response, Canada announced retaliatory tariffs on US products worth a total of 155 billion Canadian dollars and plans to challenge the US tariffs through the WTO and the USMCA agreement.
Yesterday in the lead spot market, SHFE lead fluctuated upward, and suppliers' premiums and discounts showed no significant changes. Refinery cargoes self-picked up from production sites were still quoted at small discounts. Meanwhile, secondary lead supply gradually increased, leading to relatively ample market availability. Secondary refined lead was quoted at discounts of 100-0 yuan/mt against the SMM 1# lead average price on an ex-factory basis. Downstream enterprises maintained purchasing as needed, with some rigid demand leaning towards the lower-priced secondary lead. In the primary lead spot market, transactions showed no significant improvement. Spot orders in major primary lead production regions were quoted at discounts of 50 yuan/mt to premiums of 100 yuan/mt against the SMM 1# lead average price on an ex-factory basis. In the trade market, quotations in Jiangsu, Zhejiang, and Shanghai were at discounts of 40-0 yuan/mt against the SHFE 2504 contract.
Inventory: As of March 4, LME lead inventory decreased by 1,175 mt to 191,100 mt. As of March 3, the total social inventory of lead ingots in five major regions tracked by SMM reached 70,200 mt, up by 10,300 mt from February 24 and by 7,200 mt from February 27.
》Click to View SMM Metal Industry Chain Database
Lead Price Forecast:
Recently, lead ingot inventory trends in domestic and overseas markets have diverged, while lead prices have shown an upward fluctuation trend. In March, with the impact of the Chinese New Year fading, lead ingot supply and demand are both expected to increase, and market trading activity is likely to improve compared to February. On the supply side, concentrated increases are mainly driven by the resumption of production at primary and secondary lead smelters, as well as the commissioning of new capacity. Notably, the concentrated release of new secondary lead capacity has led to a short-term surge in demand for raw materials such as scrap batteries. However, the subsequent marginal increase in lead ingot supply raises the risk of inventory buildup. Additionally, the domestic subsidies for e-bike and automobile trade-in programs have been intensified, and attention should be paid to the extent to which these programs offset the traditional off-season demand.
