Next week's key event will be the US Fed FOMC meeting, where interest rate decisions and the Summary of Economic Projections will be announced. This meeting has drawn significant market attention, as it marks the second time since the Fed began its interest rate hike cycle in March 2022 that expectations for an interest rate cut have emerged. The first occurred in September 2024, and a year later, the Fed may cut interest rates again, with the market anticipating a 25 basis point cut. Meanwhile, the National Development and Reform Commission (NDRC) stated that efforts will be made to achieve the annual economic and social development targets, with H2 continuously releasing domestic demand potential.
On the LME lead side, LME lead inventory has been declining for over half a month, with a further drop of 13,500 mt this week. However, the boost to LME lead prices has been relatively limited. During the week, LME lead prices dipped before rebounding, with the LME lead cash-3M contango widening, latest reported at -$42.99/mt. Next week, lead market trading should focus on the Fed meeting, where the expected interest rate cut is anticipated to materialize, lifting the center of LME lead prices. It is expected to trade between $1,980-2,020/mt.
Domestically, for SHFE lead, maintenance at primary lead and secondary lead smelters continues. With only half a month until the National Day holiday, the market is awaiting downstream stockpiling ahead of the holiday, which may support lead prices to hold up well. However, it is worth noting that the SHFE/LME lead price ratio has recently widened, and the import window for lead ingots is expected to open soon. If the window opens, it may offset domestic lead smelter production cuts, raising the risk of lead prices jumping initially and then pulling back. The most-traded SHFE lead contract is expected to trade between 16,800-17,200 yuan/mt next week.
Spot price forecast: 16,700-17,000 yuan/mt. On the lead consumption side, lead-acid battery enterprises are operating relatively steadily. With the National Day holiday approaching, downstream stockpiling ahead of the holiday may benefit lead consumption. For primary lead, the SHFE lead 2510 contract will enter delivery next week, and short-term spot supply is expected to decrease, though it may re-enter the market later in the week. Spot lead discounts are expected to remain difficult to narrow. For secondary lead, smelters are generally cutting production and undergoing maintenance, with regional supply tightness continuing. Meanwhile, scrap battery prices have softened and declined, improving secondary lead profitability. It is possible that secondary lead trading may see expanded discounts in the future.
