Mediocre Fundamentals, Lead Prices May Consolidate Next Week Awaiting Consumption

Next week, macroeconomic data will mainly include China's Q3 GDP annual rate, China's September YoY total retail sales, China's September YoY industrial output above designated size, and the US September MoM retail sales. Additionally, the State Council Information Office will hold a press conference on the national economic performance.

Regarding LME lead, after China's National Day holiday, LME lead inventory showed a destocking trend, with Friday's inventory decreasing by 4,475 mt compared to September 30 before the holiday. After the market digested China's favorable policy news, lead prices gradually returned to fundamentals. Against the backdrop of destocking, LME lead may stabilize. Next week, LME lead is expected to range between $2,050-2,130/mt.

For domestic SHFE lead, due to delivery factors, lead ingot inventory shifted from in-plant inventory to social warehouses, turning into visible inventory, putting pressure on lead prices. Meanwhile, limited battery scrap supply and its price not following the lead price decline have caused significant losses for smelters. The price inversion between secondary and primary lead provides some support for lead prices. Next week, we need to continue monitoring the potential increase in visible inventory due to warehouse transfers. After delivery, attention should shift to lead consumption. The most-traded SHFE lead contract is expected to range between 16,400-16,900 yuan/mt.

Spot price forecast: 16,300-16,650 yuan/mt. Supply side, for primary lead, refinery maintenance recovery and new production commissioning may continue to increase supply. Next week's delivery of the SHFE front-month contract will relatively reduce spot market circulation, and spot premiums/discounts may remain stable. For secondary lead, attention is needed on environmental inspections in Anhui and the progress of secondary lead enterprises' resumption. However, considering the high battery scrap prices, the discount space for secondary refined lead is narrow. Consumption side, downstream lead-acid battery enterprises have basically resumed production, and future focus will be on their on-demand restocking trends.