Next week, the key macroeconomic data will include China's YoY total retail sales of consumer goods and YoY industrial added value of enterprises above designated size in May, as well as the US's MoM retail sales in May. Meanwhile, the US Fed will make its interest rate decision for June next week. Especially under the influence of the US's "reciprocal tariff" and the Los Angeles incident, US President Trump once again fiercely criticized Fed Chairman Powell and further urged him to cut interest rates.
For LME lead, the decline in LME lead inventory expanded further compared to the previous week, with a weekly decrease of 16,300 mt, bringing the total inventory to 264,900 mt. Meanwhile, the LME lead cash-3M contango widened to -$27.67/mt (as of June 12). The divergence between inventory and premium trends indicates that the fundamentals are unlikely to improve. In addition, prominent overseas geopolitical conflicts continue to weigh on lead prices amid market concerns about the economy. It is expected that LME lead will maintain a consolidation trend, trading within the range of $1,970-2,010/mt.
Domestically, for SHFE lead, the SHFE lead 2506 contract will enter delivery next week. There is still an expectation of a visible inventory increase due to the transfer of lead ingots to delivery warehouses before delivery. Meanwhile, secondary lead enterprises have significantly reduced or suspended production, and primary lead enterprises have entered maintenance periods. Supply tightening has pushed lead prices to hold up well. However, it is worth noting that after the rise in lead prices, the losses of secondary lead have begun to recover. The off-season in the lead-acid battery market continues, which may constrain the upside potential of lead prices. It is expected that the most-traded SHFE lead contract will trade within the range of 16,800-17,100 yuan/mt next week.
Spot price forecast: 16,650-16,900 yuan/mt. In terms of supply, maintenance activities have increased among primary lead smelters, with many being delivery brands. Coupled with the delivery of the front-month SHFE lead contract next week, the available supply of spot lead may decrease. It is expected that spot lead will maintain a small premium quote. For secondary lead, as lead prices rebound, the losses of secondary lead have been partially recovered, and some enterprises have shown intentions to resume production. If production resumes smoothly, the premium trading of secondary refined lead may turn into a contango.
