Next week, key macroeconomic data releases will include the final reading of the US's annualized Q1 real GDP growth rate, the year-on-year change in the US's core PCE price index for May, and the final reading of the University of Michigan's consumer sentiment index for June. This week, the US Fed announced that it would maintain the target range for the federal funds rate at 4.25% to 4.5%, in line with market expectations. Considering factors such as the US's inflation rate approaching the target and tariff policies, the market still maintains its baseline forecast that the US Fed will cut interest rates twice this year, totaling 50 basis points, and expects the US Fed to take further action as early as September.
For LME lead, overseas supply is trending towards a surplus. LME lead inventory increased by 22,400 mt week-on-week, while the LME cash-3M contango widened to -$31.21/mt, dragging LME lead prices to fluctuate downward. Additionally, the intensification of geopolitical conflicts in the Middle East and the lingering issue of US tariffs have raised market concerns about the early stages of the global economy, which will continue to constrain future lead price trends. It is expected that LME lead will trade within the range of $1,965-2,010/mt next week.
Domestically, for SHFE lead, the raw material supply situation is particularly tight, stemming from both scrap batteries and lead concentrates. Recently, the decline in lead concentrate imports has led to a further reduction in TCs for both domestic and imported ores. Meanwhile, the limited volume of scrap battery scrap has made it difficult for lead smelters to build up inventories, and the slow recovery of losses in secondary lead production will also contribute to supply tightening in the ingot market. On the demand side, consumption in the lead-acid battery market remains sluggish. As the year-end approaches, large enterprises may temporarily suspend lead ingot purchases due to year-end account closing and settlement, leading to a situation of weak supply and demand. Under these circumstances, lead prices are expected to consolidate. It is expected that the most-traded SHFE lead contract will trade within the range of 16,750-17,050 yuan/mt next week.
Spot price forecast: 16,650-16,900 yuan/mt. On the consumption side, until mid-year and month-end, some downstream enterprises may reduce their spot cargo purchases due to factors such as account closing, and will be more inclined towards long-term contract purchases. On the supply side, insufficient raw material supply, the difficulty in recovering losses in secondary lead production, and the increased impact of maintenance at primary lead enterprises are expected to reduce the availability of spot market supplies. Although spot transactions are currently generally conducted at discounts due to weak consumption, spot discounts are expected to narrow slightly after the supply reduction.
