Supply reduction or balanced consumption gap: Lead prices are expected to maintain a fluctuating trend [[SMM Weekly Lead Market Forecast]]

         Next week, the key macroeconomic data will include the US's year-on-year CPI for April (unadjusted), the US's month-on-month retail sales growth for April, and the revised year-on-year GDP growth for the Eurozone in Q1. Additionally, Vice Premier He Lifeng of the State Council will visit Switzerland from May 9 to 12 to hold talks with Swiss leaders and relevant parties. During his visit, as the Chinese lead for China-US economic and trade negotiations, Vice Premier He Lifeng will hold talks with the US lead, US Treasury Secretary Bessent.

         For LME lead, after the holiday, LME lead prices first declined and then rebounded, falling to a nearly two-week low during the week before slightly easing market concerns about tariff impacts amid plans for China-US consultations. Meanwhile, LME lead inventory decreased by 8,975 mt week-on-week, and the LME lead 0-3 spread first widened and then narrowed to -$9.32/mt. Additionally, the impact of US tariffs on lead consumption in multiple countries continues to expand. It is expected that lead prices will maintain a fluctuating trend, with the price center moving slightly higher. LME lead is expected to trade within the range of $1,920-1,985/mt.

         Domestically, for SHFE lead, the off-season trend in lead consumption remains unchanged, coupled with export disruptions, leading to limited demand for lead ingots from downstream enterprises. Consumption remains a drag on lead price movements. However, there are expectations of tightening lead ingot supply, with widening losses among secondary lead enterprises leading to an increase in the number of enterprises cutting or halting production. Additionally, planned maintenance by primary lead enterprises may mitigate the impact of the consumption gap on lead prices. It is expected that the most-traded SHFE lead contract will trade within the range of 16,700-17,000 yuan/mt.

         Spot price forecast: 16,550-16,750 yuan/mt. The increased maintenance and production cuts by primary and secondary lead enterprises may, to some extent, alleviate the inventory buildup pressure on lead ingots. Next week, the SHFE lead 2505 contract will face delivery. Considering the current spread between futures and spot prices, suppliers' willingness to transfer to delivery warehouse has increased. Delivery will postpone the inventory pressure on lead ingots, and the large discount for spot lead may narrow. However, for secondary lead, more consideration is given to profit and loss levels. In the case of losses, there is still a possibility of secondary lead trading at a premium (to the SMM# lead average price).