Fundamentals combined with macro expectations may lead to a halt in the decline and a rebound in lead prices [SMM Weekly Lead Market Forecast]

         Next week, there will be fewer macroeconomic data releases, mainly including China's one-year loan prime rate (LPR) as of July 21 and the annualized total number of new home sales in the US in June (in 10,000s). Currently, the macro events that domestic and overseas markets are focusing on are tariffs and the US Fed's interest rates. Recently, the US-EU tariff negotiations have reached an impasse. According to the EU's latest proposal, if the Trump administration reduces tariffs on EU cars to below 20%, the EU will cancel the 10% tariff on US car exports, and both the US and the EU may make further concessions. Fed Governor Waller broke the recent consensus among policymakers by publicly calling for an immediate interest rate cut to address the increasingly fragile labour market. This distinct dovish stance has added new uncertainties to the upcoming policy meeting. In addition, Xie Shaofeng, Chief Engineer of the Ministry of Industry and Information Technology (MIIT), stated at a State Council Information Office press conference on July 18 that a growth stabilization plan for ten key industries, including non-ferrous metals, is about to be introduced. The MIIT will promote structural adjustments, optimize supply, and eliminate backward production capacity in key industries.

In terms of LME lead, this week, LME lead inventory reversed the downward trend of the previous three weeks, turning into an inventory buildup, with a weekly increase of 19,000 mt, bringing the total inventory to 268,400 mt. During this period, LME lead prices fell continuously, breaking through the $2,000/mt integer level, reaching a low of $1,967/mt. Meanwhile, the LME cash-3M contango widened WoW to -$27.85/mt. Affected by the ongoing impact of tariffs in overseas markets and the rise in the US dollar index, LME lead may remain in the doldrums, and it is expected to trade within the range of $1,975-$2,030/mt next week.

In terms of domestic SHFE lead, the impact of maintenance at primary lead smelters has intensified, coupled with the widening losses of secondary lead smelters. As a result, finished product inventories at smelters have generally declined, and there has been a regional tightness in the availability of circulating supplies. The spot discounts for lead have narrowed significantly WoW, potentially providing strong support for lead prices. Additionally, on Friday, the MIIT stated that a growth stabilization plan for ten key industries, including non-ferrous metals, is about to be introduced, which may inject new momentum into the lead market. It is expected that the most-traded SHFE lead contract will trade within the range of 16,800-17,200 yuan/mt next week.

Spot lead price forecast: 16,700-17,000 yuan/mt. In July, the consumption in the lead-acid battery market has been relatively mediocre. However, stimulated by the decline in lead prices, downstream enterprises have increased their buying the dip. On the supply side, maintenance and resumption of operations coexist at primary and secondary lead smelters. Due to the decline in lead prices, losses at secondary lead smelters have widened, and smelters have shown a strong reluctance to sell at low prices. Coupled with the decline in finished product inventories at some enterprises, expectations for a narrowing of spot lead discounts have risen.