[SMM Lead Morning Meeting Minutes: Supply-Side Contraction Eases Inventory Buildup Pressure, Lead Prices Expected to Maintain Consolidation Trend] PBOC: Keep the RMB exchange rate basically stable at a reasonable and balanced level. Recently, primary lead and secondary lead enterprises in some regions have undergone maintenance or production cuts, leading to regional supply tightening...

[SMM Lead Morning Meeting Summary: Delivery-Driven Inventory Buildup Puts Pressure on Short-Term Lead Prices, Which Will Consolidate on a Subdued Note] According to US media: Trump has delayed military action against Iran, saying he is "handling the Iran issue quietly." Recently, social inventory of lead ingots has been accumulating, which is a normal phenomenon before the delivery of SHFE lead...

SMM August 7: The secondary refined lead market remained in a stalemate, affected by tight raw material supply and smelting losses, with smelters holding back from selling and holding prices firm. During the week, mainstream spot order transactions were at a discount of 75-0 yuan/mt to the SMM #1 lead average price. Battery consumption remained sluggish. Downstream users only made just-in-time procurement, and with primary lead diverting demand, overall spot transactions were weak. Scrap battery prices remained relatively stable, providing strong cost support for smelters. As of August 7, 2026, the theoretical combined profit/loss for large secondary lead enterprises was -392 yuan/mt, while that for small and medium-sized plants was -570 yuan/mt. Next week, battery enterprises’ purchasing sentiment will remain the core factor affecting the market. If lead prices do not rise significantly, discounts on secondary lead shipments will be unlikely to widen further, and smelting losses will also be difficult to narrow.

Next week, the key macroeconomic data will include the US July unadjusted CPI YoY rate, July retail sales MoM rate, and preliminary August one-year inflation expectations. On the geopolitical front, tensions in the Middle East have eased. According to US media, Iran and Oman have reached a temporary agreement on the Strait of Hormuz issue; meanwhile, US President Trump again stated that military operations against Iran may end soon. In addition, the US will release several economic indicators next week, and markets will continue to monitor statements from Fed officials on future monetary policy. In the short term, the macro front remains highly uncertain, providing limited support for base metal prices. On the LME lead front, suppliers in markets outside China have been actively picking up goods recently, with LME lead inventory dropping by over 16,000 mt this week. However, considering the current overseas lead consumption situation, the supply shortage is mainly concentrated in 4N lead, while 3N lead trading remains sluggish. The market widely views this destocking as a result of inventory transfers rather than improvement in end-use consumption. Meanwhile, LME lead Cash-3M contango widened further to -$47.56/mt, also reflecting that expectations for spot consumption improvement remain limited. Attention should still be paid to developments in the Middle East and the Fed's monetary policy impact on the base metal market. Next week, LME lead is expected to continue its range-bound consolidation, trading at $1,870-1,915/mt. For SHFE lead, the accumulation of lead ingot social inventory is a normal phenomenon ahead of SHFE lead delivery. As delivery approaches next week, suppliers are expected to further increase shipments to delivery warehouses, and visible inventory may continue to rise, exerting some pressure on lead prices in the short term. However, on the supply side, maintenance shutdowns at major primary lead delivery brand smelters are gradually starting, which could become an important factor supporting lead prices in mid-to-late August. The most-traded SHFE lead contract is expected to dip first and then stabilize and rebound, with a trading range of 15,450-15,900 yuan/mt. Spot lead price forecast: 15,400-15,650 yuan/mt. In the short term, downstream lead-acid battery enterprises are seeing both production recovery and output cuts, and consumption improvement remains limited, providing insufficient support for lead prices. On the supply side, maintenance shutdowns at primary lead smelters are increasing, and market availability of goods is expected to tighten gradually, with primary lead spot cargo likely to maintain a slight premium. If lead prices gradually recover, secondary lead enterprises' losses are expected to be repaired, and smelters' willingness to sell may pick up accordingly, with secondary refined lead trading at a discount likely to increase.

It is reported that this week (July 31 – August 6, 2026), the comprehensive operating rate of primary lead smelters in the three provinces stood at 66.46%, a WoW decline of 0.56 percentage points. This week, the operating rate of primary lead smelters shifted to a decline, mainly due to medium-to-large smelters in Hunan entering maintenance, which caused a regional reduction in lead ingot supply. Meanwhile, a medium-sized smelter in Yunnan resumed production after maintenance, partially offsetting the decline. Next week, small-to-medium smelters in Yunnan will complete maintenance and resume production contribution. A medium-sized smelter in Hunan is about to enter maintenance, and the decline is expected to outweigh the growth, with the weekly operating rate of primary lead smelters continuing its downward trend.

This week (August 3-7, 2026), the SMM #1 lead weekly average price was 15,425 yuan/mt, down 40 yuan/mt WoW, with prices falling to the lowest level since late June 2023. At the beginning of the week, lead prices plunged sharply, market risk-aversion sentiment clearly heated up, and procurement sentiment among downstream enterprises diverged. Some enterprises adopted a wait-and-see approach due to concerns of further declines, while others restocked for essential needs at lower prices. Overall spot market transactions were mixed. As lead prices fell to lows, primary lead smelters' sentiment to hold back from selling at low prices strengthened. Some enterprises suspended external quotations and shipments, and the few that maintained shipments also had firm quotations. Main producing area primary lead quotations were at premiums of 50 yuan/mt against the SMM #1 lead average price ex-factory. In secondary lead, most smelters also suspended shipments to wait and see, resulting in reduced availability of circulating cargoes. A few smelters quoted at premiums of 25-50 yuan/mt against the SMM #1 lead average price ex-factory, with a small number posting premiums as high as 125 yuan/mt. After mid-week, as news of maintenance and production cuts at primary and secondary lead enterprises increased, market expectations of subsequent supply tightening grew, and lead prices stopped falling and rebounded. Downstream enterprises had some restocking demand at the early stage of the price rebound, but as lead prices rose further, considering the limited improvement in end-use consumption, their procurement enthusiasm declined again, and transactions for high-priced cargoes turned quiet. The overall market maintained a pace of purchasing as needed.