Macro Weakness Offset by Strong Fundamentals, Domestic Lead Prices Show Greater Resilience Than Overseas Markets [SMM Weekly Lead Market Forecast]

         Next week, key macroeconomic data to be released include China's Q3 GDP year-over-year growth rate and the US September non-seasonally adjusted CPI year-over-year rate. Currently, the US government shutdown has lasted over half a month. On October 16, the US Senate held its tenth vote on a temporary funding bill, which again failed to pass, with no immediate signs of the shutdown ending. Additionally, US Fed officials have sent dovish signals supporting interest rate cuts, overseas geopolitical tensions are prominent, gold prices have surged, and market expectations of a global economic downturn have intensified.

For LME lead, macro news is bearish, coupled with increasing LME lead inventory, which rose over 10,000 mt this week. LME lead fell below the 2,000 integer mark, with its overall trading center moving lower. In the short term, numerous macro uncertainties persist, and overseas lead consumption underperforms compared to the domestic market. If lead inventories continue to accumulate, lead prices are expected to extend their decline. Meanwhile, the import window for Chinese lead ingots has opened, potentially leading to more lead ingots being diverted to the Chinese market, thereby mitigating the price decline. LME lead is forecast to trade between $1,955-2,005/mt.

Domestically, for SHFE lead, lead consumption has performed better than expected. At the same time, supply from secondary lead production resumptions still requires some time to fully materialize, driving more demand toward the primary lead sector. This has led to a further decline in smelter inventory, with spot transactions tending at a premium (to SMM #1 lead), which may support lead prices to continue fluctuating at highs. The most-traded SHFE lead contract is expected to trade between 16,900-17,200 yuan/mt next week.

Spot price forecast: 16,850-17,050 yuan/mt. For primary lead, smelters in north China face a mix of maintenance and production resumptions, compounded by transportation conflicts with the fruit and vegetable season, resulting in tight spot availability. Suppliers are refusing to budge on prices. For secondary lead, smelters restarting production encounter challenges such as scrap supply shortages and limited profits, constraining the expansion of secondary refined lead discounts. On the consumption side, downstream enterprises are seeing stable to rising production. Beyond long-term contract purchases, spot order procurement is gradually recovering as well.