Contradictions Between Raw Material Supply and Consumption Persist, Short-Term Lead Prices Expected to Remain Volatile [SMM Weekly Lead Market Forecast]

         Next week, key macro data include China's August CPI annual rate, the US August non-seasonally adjusted CPI annual rate, and the preliminary US one-year inflation expectation for September. This week, US August ADP employment growth slowed sharply to 54,000, reinforcing expectations for US Fed interest rate cuts, while Fed officials expressed divergent views on rate cuts. The Fed's third-ranking official stated a gradual rate cut would be appropriate, while a 2025 voting member reiterated opposition to a September rate cut. Next week marks the final week before the Fed's policy meeting, with markets continuing to trade on expectations for US dollar interest rates and tariff changes.

For LME lead, rising expectations for US Fed rate cuts and a weaker US dollar index lifted the center of nonferrous metals prices. Meanwhile, LME lead inventories fell by over 10,000 mt weekly, while the LME 0-3 premiums and discounts diverged, with discounts widening to -$44.77/mt, hitting a new low since October 2024 month-end. Additionally, Chinese lead smelters began winter stockpiling of lead concentrates earlier, exacerbating ore supply tensions and driving TCs to historic lows, potentially supporting lead prices from a cost perspective. LME lead is expected to trade between $1,975-2,010/mt next week.

Domestically, increased production cuts by secondary lead smelters tightened supply gradually, while logistics vehicle restrictions in North and Central China were lifted, boosting spot cargo availability. However, the traditional peak season for lead-acid battery demand remained weak, with downstream enterprises maintaining just-in-time procurement, weighing on lead prices. Barring new factors, short-term lead prices may consolidate, with the most-traded SHFE lead contract likely trading between 16,700-16,950 yuan/mt next week.

Spot price forecast: 16,600-16,850 yuan/mt. Lead consumption showed no significant improvement in September, with downstream enterprises likely sustaining just-in-time procurement. For primary lead, some smelters advanced maintenance, but inventories remained at smelters, prompting suppliers to sell at discounts. Spot discounts are expected to persist next week. For secondary lead, increased maintenance at smelters in Anhui and other regions created significant regional disparities in the spot market, with large discounts for secondary refined lead transactions and price inversions between secondary and primary lead.