Lead fundamentals show mild performance, lead prices are expected to consolidate [SMM Lead Market Weekly Forecast]

         Next week is the week before the Christmas holiday, with a dense schedule of macroeconomic data releases, including China's November total retail sales YoY, China's November industrial added value of enterprises above designated size YoY, the US November unemployment rate, US November seasonally adjusted non-farm payrolls, US October retail sales MoM, and the US November unadjusted CPI YoY. This week, the US Fed cut interest rates by 25 basis points as expected and provided forecasts for the future interest rate path, projecting the median federal funds rate at 3.4% by the end of 2026 and 3.1% by the end of 2027, unchanged from the September meeting's projections.

For LME lead, recent LME lead inventory continued to decline, but the LME Cash-3M contango further widened, reaching -$51.57/mt mid-week, a 14-month low, thereby dragging down the center of LME lead's trading range. However, a weakening US dollar index and strong performance of associated metals like copper, zinc, and silver may provide some support for lead prices. LME lead is expected to stop falling and rebound next week, trading within $1,970-2,015/mt.

Domestically, for SHFE lead, the fundamentals remain mild with no prominent supply-demand contradictions, making the lead price trend unclear. Next week, primary lead and secondary lead enterprises will see mixed production changes, and with the SHFE lead 2512 contract approaching delivery, expectations of shipments to delivery warehouses may lead to visible inventory accumulation. However, spot circulation supply is expected to decrease, potentially supporting lead prices to stop falling. The most-traded SHFE lead contract is forecast to trade within 17,000-17,300 yuan/mt.

Spot price forecast: 17,000-17,250 yuan/mt. For primary lead, smelter restorations and maintenance occur simultaneously, coupled with delivery factors, limiting spot circulation supply; spot lead premiums and discounts are expected to maintain this week's levels. For secondary lead, cooling temperatures in north China affect transportation and scrap recycling, leading to tighter production at smelters who mostly hold prices firm for shipments, making it difficult for refined lead discounts to widen. On the consumption side, downstream enterprise production is stable with a slight increase, but frequent lead price fluctuations cause some downstream buyers to be cautious, mostly purchasing as needed.