Next week, data including the US November ISM Manufacturing PMI, US November ADP employment, and the US September core PCE price index annual rate will be released. According to CME's "FedWatch," the probability of a 25-basis-point interest rate cut by the US Fed in December is 86.9%. The US dollar index retreated from highs, and notably, the Renminbi appreciated recently, with the central parity rate set at 7.065 on November 28, which is favorable for the import of lead-related products.
On the LME lead side, the LME lead inventory buildup trend slowed down this week, and as the US dollar index declined, LME lead rebounded after probing lows. However, the LME Cash-3M contango widened significantly to -$38.94/mt, indicating limited support for lead prices from overseas lead consumption. Currently, the supply gap for lead concentrates persists, with TCs negotiations at a stalemate, providing effective cost support. Lead prices are expected to consolidate next week, with LME lead trading between $1,975/mt and $2,010/mt.
Domestically, for SHFE lead, as December begins, factors such as production cuts or maintenance at primary lead and secondary lead enterprises remain, leading to tight regional supply of lead ingots. Meanwhile, lead consumption has relatively improved, and lead ingot inventory may remain low, providing some support for lead prices. Subsequent attention should be paid to the year-end routine inventory building by downstream enterprises. If the destocking of lead ingots expands, lead prices will gradually rebound. The most-traded SHFE lead contract is expected to trade between 16,900 yuan/mt and 17,250 yuan/mt next week.
Spot price forecast: 16,950-17,200 yuan/mt. For primary lead, maintenance at delivery brand enterprises continues, widening regional supply disparities. If lead prices remain in the doldrums, suppliers will likely hold prices firm for sales. For secondary lead, as lead prices fall, smelting profits narrow, and smelters generally hold prices firm for sales. Meanwhile, scrap battery prices declined, potentially reducing the inverted price spread between primary lead and secondary lead. In terms of lead consumption, demand for lead-acid batteries has relatively improved, and enterprise operating rates have been raised. After lead prices stop falling, the wait-and-see sentiment among downstream enterprises for risk aversion will weaken, possibly leading to some purchasing as needed.
