With secondary lead production resumption and imported lead arrivals, lead prices may fall

This week, key macroeconomic data include the US June existing home sales (annualized), Q2 real GDP annualized preliminary value, and June core PCE price index (YoY). Recently, unexpected events in the US and European elections have caused market trading around candidate changes. Meanwhile, the Third Plenary Session of the 20th CPC Central Committee approved the "Decision of the CPC Central Committee on Further Deepening Reform and Promoting Chinese-style Modernization," proposing important reform measures such as "expanding local tax sources, orderly expanding the market for goods, services, capital, and labor to the outside world."

For LME lead, the price focus gradually shifted downward during the week, once falling below the lower Bollinger Band. Meanwhile, the LME lead cash-to-three-month contango narrowed rapidly, reporting -$29.46/mt as of July 18. With the continued decline in LME lead inventories, which is somewhat related to the opening of China's lead ingot import window, LME lead prices may rebound after hitting a low, expected to be $2,120-2,220/mt this week.

For domestic SHFE lead, the recent plans of secondary lead enterprises to resume production and the continuous arrival of imported lead have eased the tight domestic supply. Therefore, lead prices showed a trend of rising first and then falling. This week, the focus will be on the production resumption progress of secondary lead smelters, as well as changes in spot market circulation and premiums/discounts. The most-traded SHFE lead contract is expected to reach 19,100-19,650 yuan/mt.

Spot price forecast: 19,450-19,750 yuan/mt. Supply side, primary lead smelters keep production stable, secondary lead smelters plan to resume production, and imported lead supplements the market. As a result, premiums for primary and secondary lead will decline. Meanwhile, battery scrap prices continued to hit new highs, making it difficult for secondary lead discounts to expand quickly. Demand side, lead-acid battery market consumption was moderate, with downstream companies maintaining restocking as needed.