Next week, key macroeconomic data releases include China's official manufacturing PMI for October and the US annual core PCE price index for September. The US federal government shutdown entered its fourth week this week, as the temporary funding bill was again blocked in the Senate. Concurrently, with the upcoming US Fed interest rate meeting next week and the suspension of multiple economic data releases, Fed officials may face challenges in making partially "blind" judgments. Additionally, Vice Premier He Lifeng led a delegation to Malaysia from October 24 to 27 for economic and trade consultations with the US.
On the LME lead front, LME lead inventory dropped by over 10kt on a weekly basis, while the LME Cash-3M contango narrowed to -$36.83/mt, boosting the price center upward. The import window for Chinese lead ingots further opened this week, and more lead ingots are expected to flow into the Chinese market, thereby easing high inventory pressure overseas. LME lead is forecast to trade between $1,980/mt and $2,030/mt.
Domestically, for SHFE lead, from last week to this week, lead market supply shifted from regional tightness to widespread tightness, especially with scarce delivery brand primary lead supplies. October cargoes in some regions were sold out, with November cargoes being pre-sold. Combined with social inventory falling to a more than one-year low, lead prices held up well. However, it is noteworthy that the profit margin for lead ingot imports expanded, and new import deals were concluded. Subsequent upward momentum for lead prices is expected to slow. The most-traded SHFE lead contract is projected to trade between 17,350 yuan/mt and 17,800 yuan/mt next week.
Spot price forecast: 17,100-17,450 yuan/mt. For primary lead, smelter production is gradually recovering, but due to significant pre-sales, October production at some enterprises has been sold out. Meanwhile, the spread between futures and spot prices widened, prompting suppliers to consider shipping to delivery warehouses. With the new long-term contract cycle starting next week, a significant increase in circulating supply is unlikely, and spot transactions may still occur at a premium (to SMM #1 lead). For secondary lead, smelters are gradually resuming operations after maintenance, but scrap battery prices have also risen, limiting both profits and production for secondary lead. Secondary refined lead is expected to trade only at a small discount. Furthermore, on the consumption side, after the sharp rise in lead prices, downstream enterprises have become more cautious in procurement. Coupled with the start of new monthly long-term contracts, their demand for spot cargo supplements may decrease.
