SMM Jun 8: The most-traded SHFE lead 2607 contract opened at 16,392 yuan/mt intraday. It edged down slightly early in the session, then moved sideways below the average price line. The tug-of-war between longs and shorts intensified, and lead prices came under pressure in the afternoon, quickly sliding to a low of 16,305 yuan/mt. In late trading, although there was a slight recovery, the rebound was limited. It finally closed at 16,340 yuan/mt, posting a three-day winning streak, down 65 yuan/mt or 0.40%. This week, operating rates at secondary lead smelters rebounded somewhat, driving the release of incremental market supply. Meanwhile, as the delivery date approached, current lead ingot inventory also rose compared to early June. Against the backdrop of continuously weakening lead prices, secondary lead enterprises actively lowered scrap battery procurement prices, further weakening the support from raw material costs. Combined with sluggish downstream consumption, lead prices are expected to be under pressure in the short term. Data Source Statement: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM's internal database models, for reference only, and do not constitute decision-making advice.

SMM Morning Meeting Summary: Last Friday night, LME copper opened at $13,788/mt, touched a high of $13,803/mt at the beginning of the session, then the copper price center continuously moved downward, dipping to $13,499.5/mt near the end of the session, and finally settled at $13,517/mt, a decline of 2.78%. Trading volume reached 25,200 lots, and open interest was 273,000 lots, increasing by 1,576 lots compared to the previous trading day, indicating an increase in bearish positions. Last Friday night, the most-traded LME copper contract 2607 opened at 104,790 yuan/mt, rose to 105,000 yuan/mt at the start, then fluctuated downward throughout the session, dipping to 103,600 yuan/mt near the end, and finally settled at 103,800 yuan/mt, a decline of 1.84%. Trading volume reached 62,000 lots, and open interest was 167,000 lots, decreasing by 6,309 lots compared to the previous trading day, indicating a reduction in bullish positions.

Futures: Last Friday, the LME lead 3M contract opened at $2,015/mt, edged down slightly during Asian hours, then moved sideways in a narrow range of $2,006.5-2,012/mt; in the European session, it gradually strengthened on fund buying, touching a high of $2,018.5/mt, but met significant overhead resistance, pulled back toward the close, dipped to $1,999/mt, and finally settled at $1,995/mt. Last Friday night, the most-traded SHFE lead 2606 contract opened at 16,380 yuan/mt, briefly surged to 16,455 yuan/mt in early trading before coming under pressure and pulling back. It then fluctuated downward, breaking below the daily average line support, hitting a low of 16,365 yuan/mt, and finally settled at 16,405 yuan/mt, ending as a small bearish candlestick, down 30 yuan/mt or 0.18%. On the macro front: Israel launched airstrikes on Beirut’s southern suburbs, Iran responded with missile attacks, and Trump urgently intervened. US May non-farm payrolls increased by a stronger-than-expected 172,000, and the market fully priced in a 25bp rate hike by the Fed before year-end. Trump: There is no reason for the Fed to raise rates; the jobs report is very strong, stocks should go up, and economic growth does not mean inflation. Iran denied that it had agreed to transfer some enriched uranium to a third country. OPEC+ seven countries will raise production targets by 188,000 barrels per day from July. Putin rejected Zelenskiy’s “talks” proposal, saying it was meaningless. Sources: The US government is considering taking stakes in AI companies. The PBOC increased its gold reserves for the 19th straight month, up 320,000 ounces MoM. CSRC Chairman Wu Qing: Resolutely curb pseudo-innovations such as concept hype, complex nesting, excessive speculation, and channel arbitrage. Spot fundamentals: Last Friday, SHFE lead remained weak. Suppliers showed divergent selling attitudes, with some halting shipments, some selling at market, and some holding prices firm. Primary lead smelter cargoes self-picked up from production site were quoted at premiums of 0-25 yuan/mt against the SMM #1 lead average price, with ultra-high premiums (against SMM #1 lead) being lowered or shifting from discounts to premiums. In secondary lead, smelters’ losses widened, and most refrained from selling at low prices, with some secondary refined lead quotations at premiums of 0-75 yuan/mt against SMM #1 lead ex-works. Meanwhile, downstream enterprises continued dip-buying on a need-to basis, but limited rigid demand meant purchasing enthusiasm weakened compared with the previous sharp price decline. Inventories: On June 5, LME lead inventory fell by 2,175 mt to 310,350 mt; as of June 4, SMM lead ingot social inventory across five regions totaled 67,100 mt, down 1,200 mt from May 28, and up about 300 mt from June 1. Lead price outlook today: Recently, primary and secondary lead enterprises in Henan, Anhui and other regions have concentrated production resumptions, significantly increasing lead ingot supply. However, downstream consumption recovery is slow, enterprises’ purchase willingness is weak, and combined with the off-season and high temperatures, some downstream enterprises plan to suspend production for holidays, further weakening the consumption side. But as lead prices declined, scrap battery prices experienced relatively limited declines due to tight supply, leading to widening losses for secondary lead enterprises, while the cost side still provided some support for lead prices.

This week, ferrous metals diverged, with coking coal and coke extending their strength, iron ore making some concessions, and finished steel moving sideways. Early in the week, rumors about coal mine safety inspections continued to swirl, and expectations of supply tightness intensified, driving coking coal to its daily limit up. Against weak supply-demand fundamentals, iron ore took a path of conceding to coking coal and coke, while finished steel edged higher in a narrow range; later in the week, data on the five major steel products were released, with HRC inventory destocking continuing, the off-season effect on construction steel demand emerging, inventory destocking narrowing, and overall inventory pressure for finished steel also beginning to slowly accumulate......

It is reported that as of June 4, the in-factory inventory of primary lead delivery brands stood at 15,800 mt, an increase of 3,500 mt WoW. During the week, in major production areas, primary lead smelters resumed production after maintenance, leading to an increase in lead ingot supply. In the first half of the week, lead prices held up well, which dampened the purchasing enthusiasm of downstream enterprises, and coupled with the incremental supply of secondary lead as a substitute, finished product inventories at primary lead enterprises shifted to an uptrend. Meanwhile, in the second half of the week, lead prices reversed course and declined. Some downstream enterprises sought to buy the dip, and market trading activity improved slightly. However, some primary lead enterprises suspended shipments, holding back from selling due to low prices, and the inventory increase remained unchanged.

[SMM Shanghai Spot Copper] From a supply-demand perspective, consumption showed improvement compared to earlier. According to SMM, some suppliers reported an increase in downstream enterprise orders. Approaching delivery, the spread between the nearby SHFE copper contracts narrowed slightly. Buoyed by delivery-related support, suppliers’ willingness to hold prices firm rose somewhat, and Shanghai spot copper premiums edged up. In addition, import losses continued to widen, weakening the impetus for overseas cargo inflows, and supply-side increments were limited. Overall, supported by delivery dynamics, Shanghai spot copper quotes against the SHFE 2606 contract are expected to remain at a discount next week, with the discount possibly narrowing slightly.