Next week, key macroeconomic data will include China's May CPI year-on-year rate, the US's May unadjusted CPI year-on-year rate, and the initial estimate of the US's one-year inflation rate expectation for June. Additionally, the US's "reciprocal tariff" issue has resurfaced, with tariffs on steel, aluminum, automobiles, and other products being raised again. Subsequently, Chinese and US leaders had a regular phone call, during which the two heads of state agreed that their respective teams should continue to implement the Geneva consensus and hold a new round of talks as soon as possible. Going forward, it will be necessary to continue monitoring tariff changes.
Regarding LME lead, LME lead inventory continues to decline, but the total inventory remains at a multi-year high, providing limited support for lead price movements. Meanwhile, the US president has repeatedly called on the US Fed to cut interest rates, causing the US dollar index to drop consecutively, while non-ferrous metals have rebounded relatively. Before significant positive factors emerge in the lead fundamentals, lead prices are expected to remain in a consolidation phase. Next week, LME lead is expected to trade within the range of $1,965-2,005/mt.
Domestically, for SHFE lead, next week will be the week preceding the delivery of the 2506 contract. On one hand, the transfer of inventory by suppliers to delivery warehouses may lead to a further increase in visible lead ingot inventory, dragging lead prices lower. On the other hand, environmental protection checks are currently underway in regions such as Inner Mongolia and Anhui, prompting some smelters to temporarily suspend production, which may alleviate the pressure of tight scrap supply to some extent. Attention should be paid to the progress of profit recovery for secondary lead. It is expected that the most-traded SHFE lead contract will trade within the range of 16,550-16,900 yuan/mt next week.
Spot price forecast: 16,350-16,700 yuan/mt. Under the dual influence of lead ingot delivery to warehouses and downstream purchases, the in-plant inventory of primary lead smelters has decreased somewhat. Moreover, as the delivery date approaches next week, it is expected that the transfer of inventory by suppliers to delivery warehouses will increase, leading to a relative reduction in the available spot market supply after delivery. Spot discounts are expected to narrow. For secondary lead, losses remain the primary issue, with secondary lead smelters increasing production cuts. The supply gap for scrap batteries may slightly improve, and transactions involving secondary refined lead premiums are expected to decrease. On the consumption side, after lead prices rebounded from lows, downstream enterprises have gradually made purchases as needed, taking advantage of the low prices. However, against the backdrop of the off-season, the rigid demand from battery enterprises is limited. If lead prices continue to rebound, the enthusiasm of downstream enterprises for purchasing may weaken.
