Fundamental Supply and Demand Imbalance Stalemate; Lead Prices May Continue Consolidation Trend [SMM Weekly Lead Market Forecast]

SMM February 21 News: Next week, there will be few significant macroeconomic data releases, mainly including the US January core PCE price index year-on-year, US January personal spending month-on-month, and the Eurozone February industrial sentiment index. Recently, the market has been more focused on the expectation of a US tariff hike in April, as changes in tariff policies may increase pressure on subsequent economic development. LME lead: During the week, LME lead inventory declined by nearly 5,000 mt, while the LME cash-3M contango widened, reported at -$41/mt as of February 20. Fundamental imbalances are not prominent, but the risk of new US tariff hikes remains. LME lead is expected to maintain a consolidation trend in the short term, with prices forecast to range between $1,970-2,020/mt next week. Domestic SHFE lead: The spread between futures and spot prices for lead widened WoW. Even after the delivery of the SHFE lead 2502 contract, suppliers did not suspend transfer to delivery warehouses, and social inventory of lead ingots is expected to continue increasing. Meanwhile, the operating data of secondary lead producers showed an increase, further boosting demand for scrap batteries, making scrap battery prices more likely to rise than fall, thus providing cost support for lead prices. Under the influence of these two factors, lead prices are likely to maintain a high-level consolidation trend, with the most-traded SHFE lead contract expected to range between 16,900-17,300 yuan/mt next week. Spot price forecast: 16,750-17,000 yuan/mt. Recently, the resumption of production by primary and secondary lead producers has increased, coupled with the imminent release of new secondary lead capacity. After delivery, circulating supply may re-enter the market, leading to ample spot supply. Primary and secondary lead are likely to maintain discount trading. However, due to the limited supply of scrap batteries, the profit margin for secondary lead will be constrained, resulting in a narrower discount expansion compared to primary lead. On the consumption side, major lead-acid battery enterprises are operating normally, but end-use consumption remains weak, and producers are purchasing only as needed.