Post-Chinese New Year Focus on Lead Consumption Recovery and Destocking, Lead Price Volatility Range Expected to Widen [SMM Weekly Lead Market Forecast]

         Next week, the Chinese market will enter the Chinese New Year holiday, and the SHFE will be closed. Overseas markets such as South Korea, Vietnam, and Malaysia will also have varying degrees of holidays, with exchanges closed, while European and US markets will operate normally. Key economic data to be released include the US December core PCE price index year-on-year, among others. Meanwhile, the US Fed will release the minutes of its monetary policy meeting.

For LME lead, overseas market news was mediocre. After a significant increase of 30,000 mt in LME lead inventory the previous week, inventory changes this week were relatively small, and the LME Cash-3M maintained a large discount of -$47.05/mt. During the Chinese New Year period, overseas European and US markets will trade normally. We need to pay attention to the impact of US Fed officials' speeches on the US dollar index. LME lead is expected to trade between $1,920/mt and $2,040/mt during and after the holiday.

For SHFE lead, next week is the Chinese New Year holiday, and SHFE lead will be closed until trading resumes on February 24. Domestically, social inventory had already risen to a nearly five-month high in the week before the holiday. Due to varying holiday schedules among upstream and downstream enterprises during the holiday, lead consumption will be absent, and lead ingot inventory buildup is expected after the holiday. Additionally, we need to monitor the progress of downstream enterprises resuming production after the holiday and the period when lead ingot inventory shifts to destocking. After the holiday, the most-traded SHFE lead contract is expected to trade between 16,350 yuan/mt and 16,900 yuan/mt.

Spot price forecast: 16,350–16,700 yuan/mt. After the holiday, downstream lead enterprises will gradually resume production from the first to the second week post-holiday. Considering that downstream enterprises generally maintain some lead ingot inventory, procurement expectations in the first week after the holiday are limited. On the supply side, most secondary lead enterprises plan to resume production in the second week after the holiday, leading to limited market supply in the first week. Primary lead smelters, however, will operate relatively normally and are likely to be the main contributors to lead ingot inventory buildup during the holiday. After the holiday, primary lead transactions are expected to face risks of expanding discounts.