Tariff impact spreads to industry chain, lead price may fluctuate and pull back [SMM Weekly Lead Market Forecast]

         Next week, macroeconomic data will mainly include China's YoY total retail sales of consumer goods and YoY value-added industrial output above designated size for June, the US's YoY unadjusted CPI and MoM retail sales for June, among others. The US Fed will release its Beige Book on economic conditions. Additionally, the US's reciprocal tariff is currently one of the most closely watched macro events by global traders. US President Trump has indicated plans to impose a uniform tariff of 15% or 20% on most trading partners, and subsequent changes in tariff policies will require close attention.

Regarding LME lead, overseas lead inventory has decreased by over 10,000 mt for three consecutive weeks, with the latest figure dropping to 252,400 mt, driving LME lead to trade near $2,071/mt. The resurgence of the US's reciprocal tariff dispute has impacted sectors ranging from lead ore to lead-acid batteries and terminal automobiles. The initial impact is primarily reflected in the increased costs of China's imported ore and lead-acid battery exports. Meanwhile, Vietnam, one of the Southeast Asian countries producing lead-acid batteries, had initially reached a consensus with the US to reduce export tariffs to the US. However, at the last moment, the US raised the tariff rate to 20%, and Vietnam has not yet formally accepted the agreement, which may dampen expectations for lead-acid battery exports to a certain extent. Japanese automakers, on the other hand, have chosen to reduce prices to maintain competitiveness. According to data from the Bank of Japan, the YoY price index for Japan's automobile exports to North America plummeted by 19.4% last month, marking the largest single-month decline since records began in 2016. The anticipated impact of tariffs on the lead consumption side is expected to intensify, potentially dragging lead prices to oscillate and pull back. It is projected that LME lead will trade within the range of $2,000-$2,060/mt next week.

Domestically, regarding SHFE lead, the anticipated peak consumption season for lead has not yet materialized, and the supply of primary and secondary lead has also increased slowly, resulting in a stalemate between weak supply and demand. Additionally, the SHFE lead 2507 contract will enter delivery next week, and the transformation of unreported inventory into reported inventory due to delivery may drag lead prices to oscillate and pull back. Furthermore, the supply contradiction between domestic lead concentrates and scrap batteries remains prominent, providing certain cost support for lead prices. It is projected that the most-traded SHFE lead contract will trade within the range of 16,900-17,250 yuan/mt next week.

Spot price forecast: 16,800-17,050 yuan/mt. Next week, production at primary and secondary lead enterprises is expected to resume, while futures delivery may reduce the available spot cargo supply. Coupled with the high costs of raw materials such as scrap batteries, the situation of discounted transactions in the primary and secondary lead markets is expected to improve slightly. It is also worth noting that the current improvement in lead-acid battery market consumption is limited, and downstream enterprises have some willingness to buy the dip, but procurement volumes remain relatively limited.