Post-holiday fundamentals shift, lead prices are expected to consolidate within a wider range [SMM Lead Market Weekly Forecast]

         Next week, the Chinese market will be in the National Day holiday period, with exchanges such as SHFE closed from October 1 to 7 and reopening as usual on Thursday, October 8. On the macroeconomic data front, the main releases will be the preliminary University of Michigan consumer sentiment index for October and the preliminary one-year inflation expectations for October in the US. Recently, US Fed officials have reiterated their tightening stance, and market pricing for an October rate hike has pulled back from around 70% to about 50%. After the holiday, attention should be paid to the release of the Fed's monetary policy meeting minutes.

For LME lead, overseas lead inventories continued their downward trend, while the LME Cash-3M contango widened to -$32.46/mt. Combined with pressure from a stronger US dollar index, the LME lead price center moved lower. Meanwhile, the import window for Chinese lead ingots has opened again, and attention should be paid to opportunities for overseas lead ingot imports to shift to China. The LME lead consolidation range is expected to widen during China's holiday period, with LME lead trading in a range of $1,875-1,940/mt next week.

For SHFE lead, there will be only two trading days next week due to the National Day holiday. In the early post-holiday period, downstream enterprises are expected to focus mainly on digesting inventories as usual, with limited purchasing and a wait-and-see attitude. On the supply side, primary lead output is expected to grow, imported lead will gradually arrive, and expectations of lead ingot inventory buildup are rising, with lead prices expected to weaken. However, it is worth noting that smelter inventories and social inventories are at relatively low bases, leaving limited room for post-holiday lead ingot inventory buildup. Attention should also be paid to the gap between SHFE lead open interest and spot inventories. The lead price consolidation range is expected to widen, with the most-traded SHFE lead contract trading in a range of 16,000-16,450 yuan/mt after the holiday.

Spot lead price forecast: 16,000-16,300 yuan/mt. After the holiday, lead-acid battery enterprises will resume normal production, but initial procurement demand will be limited, with a high probability of focusing on digesting inventories. On the supply side, attention should be paid to the progress of production resumptions at primary lead smelters and developments at secondary lead enterprises. Spot circulating supply will increase compared with before the holiday, and spot premium transactions may be difficult to sustain.