Geopolitical Risks Persist, Lead Price Movement Next Week Expected to Focus on Fundamental Changes [SMM Lead Market Weekly Forecast]

         Next week, on the macro data front, key releases are about to include China's March total retail sales of consumer goods YoY, China's March industrial value-added output of enterprises above designated size YoY, and the US March PPI annual rate, among others. Meanwhile, the US Fed is about to release its Beige Book on economic conditions. Additionally, less than 24 hours after the US and Iran announced a ceasefire and planned negotiations, the situation shifted again, with significant uncertainty in geopolitical risks.

LME lead side, geopolitical issues outside China persisted and remained volatile. A successful US-Iran ceasefire would have a positive impact on base metals; otherwise, lead prices will continue to consolidate. Fundamentals side, LME lead inventory trended downward, confirming tightening spot market supply, but the widening LME Cash-3M contango again limited fundamental support for prices. LME lead is expected to trade in the range of $1,915-1,975/mt next week.

SHFE lead side, weakening domestic lead consumption and inflows of imported lead became the main factors dragging down lead prices. Next week, SHFE lead enters the delivery week, as suppliers transfer and ship to delivery warehouses, converting into visible inventory, lead prices may come under pressure. Meanwhile, attention should be paid to the fulfillment of secondary lead enterprise maintenance plans. If production cuts proceed as scheduled, lead prices may have the potential to dip and then rebound. The most-traded SHFE lead contract is expected to trade in the range of 16,400-16,800 yuan/mt next week.

Spot price forecast: 16,350-16,600 yuan/mt. Lead consumption side, the holiday factor has been removed, but some medium-to-large enterprises cut production due to the off-season, and downstream enterprises had limited demand for lead. Supply side, primary lead smelter production was stable with a slight increase. Combined with imported lead supplements, although secondary lead had maintenance plans, spot supply was not yet affected. Short-term spot lead is likely to maintain contango trading.