Lead prices on both the LME and SHFE markets pulled back overnight after posting modest catch-up gains, as subdued downstream demand continued to limit the scope of any sustained price recovery, according to the latest morning meeting summary published by Shanghai Metals Market (SMM). On the LME, lead opened at $1,893 per metric ton, edging higher during Asian trading hours to reach an intraday peak of $1,907.5 per metric ton. However, the metal surrendered most of those gains during European hours, sliding to a session low of $1,883.5 per metric ton before settling at $1,890 per metric ton, effectively unchanged on the day with a 0% move.
On the Shanghai Futures Exchange (SHFE), the most-traded lead 2609 contract opened at 15,735 yuan per metric ton and briefly touched a session high of 15,745 yuan per metric ton early in trading. Selling pressure intensified as bulls reduced their positions, pushing prices to a low of 15,600 yuan per metric ton in late trading. The contract ultimately closed at 15,640 yuan per metric ton, down 0.73% on the session.
On the macroeconomic front, US July ADP private payrolls came in at 44,000, falling well short of market expectations of a 70,000 increase and the downwardly revised 95,000 recorded in June, marking the weakest reading since January. The US Treasury Department announced it would maintain its debt buyback program at the same pace as the prior quarter and keep auction sizes unchanged for at least the coming few quarters. On the Sino-US trade front, China's Ministry of Commerce announced countermeasures targeting US compliance testing companies, with China's designated certification body for CCC certification suspending its mandate to US organizations for factory follow-up inspections.
China's Ministry of Foreign Affairs also reiterated its opposition to US restrictions on Chinese optical modules, citing what it described as an overly broad application of national security grounds. In the Chinese spot market, Chihong lead in Shanghai was quoted at 15,730 to 15,830 yuan per metric ton, representing premiums of 50 to 100 yuan per metric ton against the SHFE 2609 benchmark. SMM reported that spot market quotes in Jiangsu, Zhejiang, and Shanghai remained stable as suppliers moved cargo in line with the market.
However, primary lead smelter pricing showed divergence: smelters maintained firm asking prices while traders widened their discounts, with mainstream producing regions quoting premiums of 0 to 50 yuan per metric ton against the SMM Number 1 lead average price. In the secondary lead segment, smelters demonstrated slightly improved willingness to sell as prices rebounded. Secondary refined lead was quoted at discounts of 25 to 0 yuan per metric ton against the SMM Number 1 lead average price, with select transactions occurring at a premium of 75 yuan per metric ton.
Despite the firmer tone on the supply side, downstream enterprises adopted a strong wait-and-see posture. Inquiries fell sharply compared to the previous session, with some suppliers reporting virtually no buying interest, and spot trading volumes declined significantly. On the inventory front, LME lead stocks fell by 3,325 metric tons on August 5 to stand at 431,550 metric tons.
Meanwhile, SMM's social inventory survey across five major domestic locations totaled 72,100 metric tons as of August 3, representing an increase of 3,700 metric tons from July 27 and 3,600 metric tons from July 30. Looking ahead, SMM noted that primary lead production is expected to decline in August as additional smelter maintenance schedules take effect. Secondary lead output also faces downside pressure, though the recent price rebound may prompt some producers to resume operations earlier than planned.
The market should also monitor the risk of lead ingot warehouse transfers by suppliers ahead of the delivery period, which could weigh on prices given the currently elevated level of social inventories. On the demand side, SMM described the overall consumption environment as neutral. The e-bike battery sector is showing conservative demand, with July and August typically characterized by relatively stable seasonal patterns.
In the automotive sector, demand dynamics remain mixed: producers focused on export orders are performing well, while those serving the domestic Chinese market are underperforming. SMM concluded that while the exit of short positions has supported a near-term rebound and catch-up rally in lead prices, the trajectory of consumption will ultimately determine the ceiling for any price recovery. Source: Shanghai Metals Market (SMM), news.metal.com
Source: news.metal.com