Macro and Fundamentals Perform Poorly; Short-Term Lead Prices Are Expected to Remain Weak [SMM Weekly Lead Market Forecast]

SMM January 3 News: Next week, the key macroeconomic data include the Eurozone December CPI year-on-year preliminary value, Eurozone November PPI month-on-month, US December unemployment rate, and US December seasonally adjusted non-farm payrolls. Additionally, the US Fed will release the minutes of its December monetary policy meeting.

LME lead: After the New Year holiday, the US dollar index strengthened, and base metals generally came under pressure and declined. Even against the backdrop of overseas lead inventory destocking, the center of LME lead prices continued to shift downward, with the market interpreting the destocking as more likely a mere inventory transfer. Meanwhile, as the US presidential inauguration approaches, the market is trading on the risks associated with the new administration's policies and the transition. LME lead is expected to trade in the range of $1,885-1,970/mt.

Domestic SHFE lead: On the supply side, the impact of environmental protection fluctuates, leading to significant regional differences in lead ingot supply. Coupled with the fact that battery scrap prices are more likely to rise than fall, spot transactions with premiums are the norm. On the demand side, post-New Year consumption has been mediocre, and pre-Chinese New Year restocking expectations have yet to materialize. Additionally, expectations for production cuts among major downstream players have created a supply and demand stalemate in the market. Following the decline in lead prices, attention should be paid to the cost of secondary lead and the fulfillment of downstream pre-Chinese New Year restocking expectations. The most-traded SHFE lead contract is expected to trade in the range of 16,500-16,900 yuan/mt next week.

Spot price forecast: 16,550-16,800 yuan/mt. On the supply side, the primary and secondary lead markets are frequently affected by environmental protection measures, maintaining a tight supply of lead ingots, and spot lead is expected to continue trading with premiums. On the demand side, year-end consumption in the lead-acid battery market remains mediocre. With weaker lead prices, downstream enterprises are mostly purchasing as needed and are largely observing pre-Chinese New Year restocking.

According to the SMM model, the average price range for SMM 1# lead ingots is forecasted to be [16,535, 17,265], with an extreme price range of [16,190, 17,700], a normal price range of [16,420, 17,410], and a conservative price range of [16,650, 17,120]. The support range is [16,420, 16,650], and the resistance range is [17,120, 17,410].

The model predicts that the LME electronic lead closing price will trade in the range of [1,965, 2,050] from this Friday to next Thursday, with an extreme price range of [1,940, 2,090], a normal price range of [1,960, 2,060], and a conservative price range of [1,970, 2,040]. The support range is [1,960, 1,970], and the resistance range is [2,040, 2,060].

The model predicts that the closing price of the most-traded lead contract will trade in the range of [16,555, 17,415] from this Friday to next Thursday, with an extreme price range of [16,210, 17,820], a normal price range of [16,440, 17,550], and a conservative price range of [16,670, 17,280]. The support range is [16,440, 16,670], and the resistance range is [17,280, 17,550].