The contradiction between raw material supply and consumption expectations is intertwined, and short-term lead prices may continue to hold up well [SMM Weekly Lead Market Forecast]

         Next week, on the macro front, attention should be paid to the impending end of the US's reciprocal tariff suspension period. The Trump administration may start sending unilateral tariff rate notifications to trading partners as early as Friday, setting new tariff rates before July 9. Additionally, this week's US non-farm payrolls data exceeded expectations, dashing hopes for a US Fed interest rate cut in July. This suggests that the US market will still need to endure relatively high interest rates in H2, and attention should be paid to the subsequent minutes of the US Fed's monetary policy meetings.

For LME lead, overseas seasonal consumption expectations are rising. This week, LME lead inventory continued its downward trend, decreasing by over 10,000 mt to 263,000 mt. Alongside the rise in lead prices, the LME lead cash-3M contango widened to -$26.47/mt. In addition to the boost in lead consumption expectations, the recent in-the-doldrums performance of the US dollar index has also provided certain opportunities for base metals. It is expected that next week, LME lead will trade within the range of $2,030-$2,090/mt.

Domestically, for SHFE lead, there is an increasing expectation of ingot supply growth in July, leading to a synchronous increase in demand for raw materials such as lead concentrates and scrap batteries. High demand has further pushed up raw material costs, which will boost lead prices to hold up well. However, it should be noted that the current lead-acid battery market has not truly entered the peak season. High lead prices have constrained downstream procurement enthusiasm. Additionally, the spread between futures and spot prices for lead has widened to over 200 yuan/mt. Before the next round of lead futures delivery, the possibility of unreported inventory turning into reported inventory will still affect the pace of lead price increases. It is expected that next week, the most-traded SHFE lead contract will trade within the range of 17,050-17,450 yuan/mt.

Spot price forecast: 16,950-17,200 yuan/mt. Entering July, factors such as year-end inventory checks and settlements at lead-acid battery enterprises at the end of June have been resolved. Coupled with expectations for the traditional peak season, producers have basically resumed regular procurement. On the supply side, primary and secondary lead enterprises have resumed production after maintenance, and there is an expectation of new capacity coming online. The supply increase is expected to materialize earlier than consumption growth, and spot lead will also maintain contango trading.