Lead futures on both the London Metal Exchange and the Shanghai Futures Exchange ended last Friday's session on a cautious note, with prices consolidating within a narrow range as delivery-related inventory pressures mount ahead of the upcoming SHFE lead contract expiry. On the LME, lead opened at $1,870 per metric ton and traded sideways for much of the session, mirroring the muted tone of the prior day. An early attempt to reclaim the psychologically significant $1,900 per metric ton level fell short.
As the European session got underway, prices drifted lower, hovering around $1,885 per metric ton before settling at that level, registering a marginal gain of 0.03% on the day, according to data compiled by Shanghai Metals Market (SMM). On the domestic front, the most-traded SHFE lead 2609 contract opened at 15,690 yuan per metric ton before pulling back swiftly, finding support near 15,650 yuan per metric ton — a level underpinned by both the 5-day and 10-day moving averages. The contract ultimately closed at 15,665 yuan per metric ton, down 0.29% on the day, with open interest recorded at 639.91 million lots, a decline of 201 lots from the prior session.
On the macroeconomic front, China's National Bureau of Statistics reported that the country's Consumer Price Index rose 0.5% year-on-year in July, while the Producer Price Index climbed 3.5% year-on-year for the same period. Meanwhile, geopolitical tensions in the Middle East continued to attract market attention. According to US media reports, President Trump postponed potential military action against Iran, characterizing the situation as being handled in a low-key manner.
Iranian media reported that its parliament's National Security Committee approved a security framework for the Strait of Hormuz. US Vice President Vance described the US-Iran standoff as still in a middle phase, with the US military said to be seeking an exit and Iran presenting six conditions for reopening the strait. Separately, Saudi Aramco's Jazan refinery was reportedly attacked again, further escalating concerns over Middle East energy supply security.
In the spot market, lead traded on a subdued note as suppliers across both northern and southern Chinese regions actively offered material for sale. In southern production areas, quotes were mostly at small premiums, with mainstream producing zones offering at premiums of 0 to 25 yuan per metric ton against the SMM Number 1 lead average price for factory delivery. In the secondary lead sector, smelters gradually entered the market with offers, with secondary refined lead quoted at discounts of 50 to 0 yuan per metric ton against the same SMM benchmark.
Downstream buyers remained largely on the sidelines, with limited inquiries observed. Some end-users held off purchases, waiting for prices to pull back before restocking, leaving spot market trading sluggish overall. On the inventory side, as of August 7, LME lead stocks stood at 424,575 metric tons, declining by 3,850 metric tons from the prior trading day.
Total SHFE lead ingot inventory was reported at 70,698 metric tons, a decrease of 919 metric tons from the previous week, according to SMM data. Looking ahead, SMM analysts note that the seasonal buildup of social inventory of lead ingots is a recurring pattern ahead of SHFE lead contract delivery periods. With delivery approaching this week, the transfer of material by suppliers to registered delivery warehouses is expected to intensify, which could push visible inventory levels higher and exert further downward pressure on near-term lead prices.
However, supply-side dynamics may provide some cushion in the medium term. Maintenance schedules are gradually being implemented at major primary lead smelters whose brands qualify for SHFE delivery, a development SMM expects to serve as an important price support factor in the second half of August. Against this backdrop, SMM forecasts that short-term lead prices will continue to consolidate on a subdued note.
All data and analysis cited in this article are sourced from Shanghai Metals Market (SMM). SMM notes that, except for publicly available information, all other data are processed based on market communication and SMM's internal database models, and are intended for reference purposes only, not as investment or decision-making advice.
Source: news.metal.com