This week is the final week before the traditional Chinese New Year. The Shanghai Futures Exchange will not conduct night trading on the evening of February 8. Traders should pay attention to changes in trading hours. In terms of economic data, the Chinese, American and European markets will release CPI and PPI data, the monthly wholesale sales rate of the United States in December, etc. In addition, the escalating tensions in the Red Sea have continued to have knock-on effects on the global supply chain, triggering market concerns about higher inflation and supply disruptions, and may delay the pace of Europe's economic recovery.
LME lead stocks continued to increase to 120,000 mt last week, lowering LME lead prices. As of February 1, the backwardation of LME cash to the three-month contract stood at $6.59/mt. LME lead prices are expected to run at $2,115-2,185/mt this week.
There will be only 4 trading days on the SHFE this week due to Chinese New Year. According to the holiday arrangements of upstream and downstream enterprises, some medium and large enterprises of primary lead and secondary lead will not shut down during the Chinese New Year holidays, while all downstream enterprises will close, translating into a surplus of lead ingot supply. In order to avoid risks that may arise during the Chinese New Year, some traders plan to reduce or close their open interest, lowering market trading activity. The most active SHFE lead contract prices are expected to stand between 16,100-16,350 yuan/mt this week.
Spot prices are expected to move between 15,950-16,200 yuan/mt. Logistics will be suspended as the Chinese New Year holiday is approaching. The lead spot market will gradually quieten. This week, there may be a very small number of procurement in the first half of the week, but procurement will basically stop in the second half of the week. In terms of primary lead and secondary lead, some medium and large enterprises continued to produce normally, and lead ingot inventories are expected to gradually increase. Due to logistics issues and bleak spot market trades, most of the growth in lead ingot inventories will occur at smelters.
