Ship to Delivery Warehouse, Transportation Restrictions, and Other Factors Combine to Raise Concerns About the Risk of Lead Prices Retreating After Rapid Rise [SMM Weekly Lead Market Forecast]

         Next week, key macroeconomic data releases include the US October unadjusted CPI YoY, US October retail sales MoM, China's October total retail sales of consumer goods YoY, and China's October industrial added value of enterprises above designated size YoY. This week, the Customs Tariff Commission of the State Council officially announced the continued suspension of the 24% tariff hike on US goods for one year, while maintaining a 10% tariff hike. The US federal government shutdown entered its 37th day, becoming the longest government shutdown in US history. With mixed macro news, lead market trading may focus more on fundamentals.

On the LME lead side, overseas lead ingot destocking continued, with LME lead inventory declining by over 10kt weekly for three consecutive weeks. Notably, the LME lead Cash-3M contango narrowed to -$14.96/mt, reaching a high in nearly half a year, potentially supporting lead prices to hold up well. Additionally, the import arbitrage window for Chinese lead ingots shifted from profit to loss, making it unfeasible for overseas lead ingots to flow into the Chinese market, which may slow subsequent LME lead ingot destocking. Lead prices are expected to fluctuate at highs, with LME lead trading between $2,010-2,050/mt.

Domestically, for SHFE lead, primary lead and secondary lead smelters gradually resumed operations after maintenance, while downstream enterprises also relatively recovered after production cuts. With both supply and demand for lead ingots increasing and the current low inventory base, lead prices held up well. Additionally, next week is the week before the SHFE lead delivery, where invisible inventory will turn into visible inventory, raising caution about the risk of prices retreating after a rapid rise. The most-traded SHFE lead contract is expected to trade between 17,300-17,650 yuan/mt next week.

Spot price forecast: 17,150-17,400 yuan/mt. For primary lead, smelters plan to resume operations after maintenance, but air quality control in North China has not been lifted, prolonging lead ingot transportation cycles in some areas. Combined with the delivery factor, regional tightness in lead ingot supply may persist, and spot lead is expected to maintain a premium. For secondary lead, scrap battery supply is moderate, and secondary lead production is stable to increasing. Discounts for secondary refined lead may widen in some regions, but transaction prices in major consumption areas remain relatively firm. Regarding lead consumption, downstream enterprises basically maintain purchasing as needed, and current end-use consumption in the lead-acid battery market is sluggish, with some smaller enterprises implementing production cuts.