US Tariff Increase Risk Reduced, Lead Price Movement to Lean Toward Fundamentals [SMM Weekly Lead Market Forecast]

Published: Apr 25, 2025 16:12

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Next week, the Chinese market will observe the Labour Day holiday, with the SHFE suspending night session trading on April 30 and closing on May 1-2. Meanwhile, a series of macro data will be released, including China's official manufacturing PMI for April, the US ADP employment change (in 10,000s) for April, the US core PCE price index annual rate for March, the US unemployment rate for April, and the US seasonally adjusted non-farm payrolls (in 10,000s) for April. This week, the US softened its stance on tariff hikes, while US Fed Governor Waller stated that a severe downturn in the job market could prompt the Fed to cut interest rates more and faster, easing market concerns.

On the LME lead front, the biggest risk factor this week—the tension over US tariff hikes—eased, leading to a general rebound in non-ferrous metals. Mid-week, an accident at Peru's Antamina copper-zinc mine caused a production halt, boosting lead as a by-product. Additionally, LME lead inventories reversed their trend and declined, becoming one of the factors supporting the rise in lead prices. During China's Labour Day holiday next week, we need to pay closer attention to overseas market dynamics, especially the US employment data's guidance on US dollar interest rate cuts. Lead prices are expected to range between $1,920-1,990/mt.

Domestically, SHFE lead will have only three trading days due to the Labour Day holiday. Recently, as the lead-acid battery market is in its traditional off-season, the supply of scrap batteries has decreased, widening the scrap supply gap. Secondary lead producers are generally facing losses, and the number of production cuts has further increased, becoming a major factor supporting the rebound in lead prices. With the Labour Day holiday approaching, many downstream lead-acid battery companies plan to take a break, leading to a temporary consumption gap that may limit the upside potential for lead prices. The most-traded SHFE lead contract is expected to range between 16,800-17,150 yuan/mt.

Spot price forecast: 16,750-17,000 yuan/mt. Primary lead smelters are experiencing mixed production changes, with supply remaining relatively stable. Meanwhile, the spread between futures and spot prices has widened, increasing suppliers' willingness to transfer to delivery warehouses. Attention should be paid to changes in social inventory of lead ingots next week, with spot transactions expected to maintain a slight discount. In the secondary lead sector, due to losses and production cuts, the discount on secondary refined lead prices is gradually narrowing, even showing an inversion compared to primary lead. Secondary lead producers are expected to stand firm on quotes until profitability improves. On the consumption side, downstream companies plan to take a break during the Labour Day holiday, and with end-use consumption remaining weak, producers have limited pre-holiday inventory, making a significant improvement in spot transactions unlikely.

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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