Complex Macro Factors, Domestic Inventory Buildup Will Continue to Weigh on Lead Prices [SMM Lead Market Weekly Forecast]

         Next week, key macroeconomic data will include the US June core PCE price index y/y, the US July University of Michigan consumer sentiment index final reading, and China's July official manufacturing PMI, with the major event being the US Fed FOMC interest rate decision. With only a few days until the Fed meeting, the market remains deeply divided over whether the Fed will hike rates this month, a situation rarely seen in recent years. The market widely expects a high probability that the Fed will keep rates unchanged, though attention still needs to be paid to the policy signals from the meeting and the post-meeting statement. Meanwhile, the US reimposition of reciprocal tariffs and the escalating US-Iran conflict, together with rising energy costs such as crude oil, have heightened market concerns over the global economic outlook.

LME lead side, after a surge in LME lead inventory outside China the previous week, LME lead cancelled warrants increased significantly this week, up nearly 30,000 mt WoW. Geopolitical tensions outside China, rising crude oil prices, and shipping constraints have pushed up lead prices from the cost side. At the same time, expectations of lead consumption growth in the Southeast Asian market persist, which will provide some support for the lead market, but high lead ingot inventory pressure will still limit the upside room for lead prices. Next week, LME lead is expected to trade at $1,875-1,935/mt.

SHFE lead side, as August approaches, the market has expectations for the traditional peak season for lead-acid batteries, but actual consumption so far has been disappointing. While smelter production has been steady to slightly higher, lead ingot inventory faces further accumulation pressure. Currently, lead ingot inventory is mainly concentrated at smelter warehouses. Going forward, attention should be paid to the potential shift from invisible to visible inventory, which could continue to weigh on lead prices. Next week, the most-traded SHFE lead contract is expected to trade at 15,550-15,950 yuan/mt.

Spot lead price forecast: 15,500-15,750 yuan/mt. Consumption side, demand in the lead-acid battery market remains weak. Downstream enterprises remain cautious in procurement, with just-in-time procurement still dominant. Supply side, primary and secondary lead smelters are seeing mixed production adjustments. Spot market supply is ample, and spot cargoes are generally trading at a discount. With new monthly long-term contracts set to begin execution next week, the spot market discount structure may be hard to improve significantly.