[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.

It is learned that as of August 6, the in-factory inventory of major delivery brands of primary lead stood at 22,200 mt, down 2,200 mt WoW. This week, maintenance and production cuts increased at some primary lead smelters in south China, leading to a phased tightening of lead ingot supply. At the beginning of the week, affected by falling lead prices, downstream enterprises’ dip-buying interest picked up, driving the destocking of smelter inventories; however, as lead prices stopped falling and rebounded in the latter half of the week, downstream purchases turned cautious again, market transactions returned to just-in-time demand, and the decline in in-factory inventory was relatively limited. Next week will enter the week before delivery of the SHFE lead 2608 contract, and suppliers are expected to move more inventories to delivery warehouses for delivery; some in-factory lead ingots may continue to be transferred to delivery warehouses. Driven by the delivery factor, the in-factory inventory of primary lead smelters is expected to maintain its downtrend.

SMM, August 7: As of August 6, secondary lead finished product inventories stood at 27,600 mt, down 6,700 mt MoM. This week, lead prices dipped before rebounding. Downstream users took advantage of low prices for essential restocking, and coupled with ongoing production cuts at smelters and lower operating rates, tightening supply drove destocking of smelters' inventories. Battery consumption remained in the off-season. Downstream saw no large-scale stockpiling, with most purchases made as needed, and transactions were mild. Looking ahead to next week, secondary lead production cuts are expected to continue, and tightening spot supply will continue to support destocking. However, end-use demand remains weak, and lead price rebound lacks momentum. Primary lead's cost advantage continues to divert demand, making a significant improvement in downstream purchases unlikely. Smelter inventories are expected to keep drawing down but at a limited pace, and the market is likely to consolidate on a subdued note. Focus on the implementation of smelter production cuts and end-user rigid demand.

SMM, August 7: Overnight, LME lead opened at $1,892.5/mt, drifted lower during the Asian session. Entering the European session, LME lead first dipped then rebounded, hitting a low of $1,880/mt before quickly surging to a high of $1,897/mt, then weakened near the end of the session as bears added positions, finally closing at $1,884.5/mt, down 0.29%. Overnight, the most-traded SHFE lead 2609 contract opened higher with a gap at 15,700 yuan/mt, briefly touched a high of 15,760 yuan/mt at the start of the session, then drifted lower as bears cut positions, dipping to a low of 15,665 yuan/mt near the end, and finally closed at 15,680 yuan/mt, up 0.19%. Early this week, lead prices slumped sharply, falling to a more-than-three-year low. Risk aversion sentiment heated up in the spot market. Lead smelters generally held back from selling at low prices, while downstream enterprises exhibited a mix of wait-and-see caution on fears of further declines and dip-buying. With smelters holding back sales and the availability of circulating cargoes tightening, some downstream enterprises turned to purchasing from social warehouses, which led to a decrease in lead ingot social inventory during the week. However, as the front-month SHFE lead contract approaches delivery, some delivery brand cargoes continue to be moved to delivery warehouses, and social inventory still faces the risk of buildup. Watch out for its drag on lead prices. Moving into mid-to-late August, attention should also be paid to the maintenance progress of primary lead smelters and its impact on lead ingot social inventory.

Futures: Overnight, LME lead opened at $1,892.5/mt, drifting lower during the Asian session. Entering the European session, LME lead initially dipped before rebounding, touching a low of $1,880/mt before quickly surging to a high of $1,897/mt. It weakened near the close due to increased bearish positioning, ultimately closing at $1,884.5/mt, a decline of 0.29%. Overnight, the most-traded SHFE lead 2609 contract opened higher with a gap at 15,700 yuan/mt, briefly touching a high of 15,760 yuan/mt early in the session. Due to bear position lightening, SHFE lead drifted lower, touching a low of 15,665 yuan/mt near the close, and finally settled at 15,680 yuan/mt, a gain of 0.19%. On the macro front: On Thursday, it was reported that Iran's proposed Hormuz navigation agreement would ban the passage of hostile vessels. Meanwhile, as the market awaits guidance from non-farm payrolls data, a growing number of US Fed officials are talking about the option of near-term interest rate hikes. The US dollar index rebounded, momentarily reclaiming the 100 mark, and finally closed up 0.24% at 99.94. US Treasury yields rose across the board, with the benchmark 10-year yield near flat, closing at 4.679%; the 2-year US Treasury yield, which is sensitive to the Fed's policy rate, closed at 4.258%. The DRC banned the export of copper concentrates and cobalt concentrates. World Gold Council: Looking ahead, a second wave of high inflation similar to the late 1970s cannot be ruled out, though this does not inherently imply a significant rise in gold. China Gold Association: China's gold production fell 14.62% YoY in H1 2026, while consumption grew 1.23%. DeepSeek plans to raise the overall pricing of its API services in the near term, with the increase expected to be substantial. Spot fundamentals: SHFE lead lacked upward momentum and maintained a consolidative trend. Suppliers held prices firm when selling, but downstream purchasing enthusiasm declined from yesterday, with spot market transactions weakening in some regions. Currently, a north-south price divergence persists for primary lead smelters' shipments; mainstream producing areas quoted at premiums of 0-50 yuan/mt over the SMM #1 lead average price ex-factory, with actual transactions near parity. For secondary lead, smelters sold flexibly, with secondary refined lead quoted at discounts of 50-0 yuan/mt against the SMM #1 lead average price ex-factory, widening from yesterday's discount level. Among downstream enterprises, some made just-in-time procurement, dampening overall market trading activity. Inventory: On August 6, LME lead inventory decreased by 3,125 mt to 428,425 mt. According to SMM, as of August 6, total social inventory of SMM lead ingots across five regions reached 70,600 mt, up 2,100 mt from July 30, but down 1,500 mt from August 3. Lead Price Forecast for Today: At the start of the week, lead prices plunged to their lowest in over three years, heightening risk-averse sentiment in the spot market. Lead smelters generally held back from selling at low prices, while downstream enterprises showed a mix of caution on fears of further declines and dip-buying. As smelters held back from selling and market supply tightened, some downstream enterprises turned to sourcing from social warehouses, driving a decline in social inventory of lead ingots during the week. However, as the SHFE lead front-month contract approached delivery, some delivery brand cargo continued moving to delivery warehouses, posing a risk of further social inventory buildup, which could weigh on lead prices. Moving into mid-to-late August, attention should also be paid to the maintenance progress at primary lead smelters and its impact on lead ingot social inventory.