European and US exchanges will close on March 29 due to Good Friday. Key economic data due this week mainly includes the final annualised real GDP in the fourth quarter of the United States, the annualised core PCE price index in February, the one-year inflation rate expectation in March, and the personal spending in February.
In terms of LME lead, due to lead ingot deliveries, LME lead inventory increased sharply to 267,700 mt as of March 21, setting a new high since March 22, 2013. The contango of LME cash to the three-month contract expanded rapidly and stood at $50.68/mt as of March 21. The lead ingot inventory is still high, while unexpected closures at overseas lead and zinc mines has shrunk the supply of lead concentrates. This may lead to a rebound in LME lead prices. LME lead prices will move between $2,005-2,105/mt.
In late March, both supply and demand in China’s domestic markets declined. Maintenance of primary lead smelters has increased, and the supply of delivered brands has been reduced again. On the other hand, the profit of secondary lead is still high, and the supply is stable and increasing. However, downstream companies are cautious in purchasing during the off-season. Given the ample supply of cargoes in the spot market, lead prices are unlikely to stop falling. Lead concentrate TCs fell, and ore supply tightened further amid production halts at large overseas mines. There can be support from costs for lead prices. The most active SHFE lead contract is expected to trade between 16,050-16,300 yuan/mt.
The spot prices are expected to move between 15,950-16,200 yuan/mt. In terms of primary lead, an increased number of delivery brand companies implemented maintenance, thus the supply of lead ingots has tightened again. Meanwhile, available cargoes under small orders are expected to increase in view of the fulfilment of new monthly long-term contracts. Spot lead is expected to trade with discounts in the near term. In terms of secondary lead, the supply of battery scrap is acceptable, and production at smelters has increased steadily. Available cargoes are ample. In this scenario, secondary lead may continue to trade with a discount. In terms of lead consumption, the traditional off-season is approaching. Battery companies generally determine production based on sales, and there is little enthusiasm for purchasing raw materials.
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