Increase in Domestic Chinese New Year Breaks; Lead Prices Next Week Need to Focus on Macro and Overseas Trends [SMM Weekly Lead Market Forecast]

Published: Jan 17, 2025 16:37

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SMM January 17 News: Next week marks the week before the Chinese New Year, with a stronger festive atmosphere in the market. Key overseas macroeconomic data include the final January manufacturing PMI for the Eurozone, the final January S&P Global Manufacturing PMI for the US, the preliminary January University of Michigan Consumer Sentiment Index, and the preliminary January one-year inflation expectations for the US. Additionally, Donald Trump will be inaugurated as the new US president, with continued attention on the risks of changes in tariff policies.

For LME lead, overseas lead inventory unexpectedly increased by 11,000 mt over the week, bringing LME lead inventory to 236,800 mt. During this period, the LME cash-3M contango first widened and then narrowed, closing at -$27.36/mt as of January 16. Dovish remarks from US Fed governors regarding interest rate cuts weakened the US dollar index. Meanwhile, the inauguration of the new US president next week introduces policy uncertainties. Overall, LME lead is expected to fluctuate upward but with limited upward momentum, operating within the range of $1,935-2,015/mt.

For domestic SHFE lead, the lead market is increasingly influenced by the Chinese New Year atmosphere. As more downstream enterprises begin their holidays, spot trading is gradually weakening, and spot premiums are unlikely to be sustained for long. Currently, many lead smelters are focused on clearing inventory, with a relatively low inventory base. Additionally, as downstream enterprises take holidays, some secondary lead enterprises will follow suit, leading to a simultaneous decline in supply and demand for lead ingots. Next week, the lead market will require closer attention to macro and overseas market dynamics, with the most-traded SHFE lead contract expected to operate within the range of 16,450-16,900 yuan/mt.

Spot price forecast: 16,500-16,850 yuan/mt. Next week, lead-acid battery enterprises will enter a concentrated holiday period, further weakening lead consumption. Meanwhile, logistics vehicles will cease operations by around January 23, allowing downstream enterprises to conduct final inventory restocking. On the supply side, some secondary lead enterprises will follow downstream enterprises in taking holidays, while primary lead enterprises will mostly maintain normal production. Lead ingots are expected to face inventory buildup pressure, with spot premiums likely to continue narrowing and a state of nominal prices but no transactions emerging in the latter half of the week.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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