Next week, key macro data include the US Q2 real GDP annualized quarter-on-quarter final value, the US August core PCE price index year-on-year, and the US September one-year inflation rate expectation final value. The US Fed cut interest rates as expected this week, marking the first interest rate cut in 2025 and signaling current economic downside risks.
For LME lead, LME lead inventory declined for the fourth consecutive week, but the LME lead 0-3 premium and discount remained at a wide discount, approaching -$50/mt during the week. Due to factors such as tariffs, lead-acid battery market consumption expectations weakened in overseas Southeast Asian markets, and spot market circulating supply increased, indicating a mismatch between actual consumption and LME lead inventory destocking, providing limited support for lead prices. Meanwhile, the SHFE/LME price ratio expanded, and some lead ingots will flow into the Chinese market. Additionally, with high demand for lead concentrates, China's imported ore TC fell further, which may provide some support for lead prices. LME lead is expected to trade at $1,990-2,020/mt next week.
Domestically, for SHFE lead, next week is the week before the National Day holiday. Downstream enterprises still have pre-holiday stocking demand expectations. Meanwhile, primary lead smelters resumed production after maintenance, secondary lead losses narrowed, some enterprises plan to resume production, and a small amount of imported lead will arrive in China around month-end. Overall, bullish and bearish factors are intertwined. Considering the low expectation of inventory buildup before the holiday, lead prices may hover at highs. The most-traded SHFE lead contract is expected to trade at 16,950-17,250 yuan/mt next week.
Spot price forecast: 16,850-17,100 yuan/mt. For primary lead, smelters resumed production after maintenance, and delivery sources re-entered the circulation market, so tight spot supply may ease relatively. For secondary lead, smelters are progressing with production resumptions, and imported crude lead supplements are available, raising expectations for secondary lead enterprise production resumptions, though it will take some time for output to contribute. Overall, before the National Day holiday, downstream enterprises still have some stocking demand, and with current low smelter inventory, primary lead is expected to refuse to budge on prices for shipments. Meanwhile, due to regional supply differences, the price spread for refined lead by region widened, and premium trades (against the SMM #1 lead average price) decreased for secondary lead.
