Next week, the Chinese market will be closed for the Dragon Boat Festival holiday. SHFE and other exchanges will not operate night sessions on Thursday evening and will be closed all day on Friday. On the macro data front, China's May total retail sales YoY, China's May industrial value-added above designated size YoY, and the US May retail sales month-on-month rate are about to be released. Additionally, a key event will be the first policy meeting of the new US Fed chair since taking office. The market expects the June interest rate to remain unchanged, with greater focus on when the US Fed will start raising rates.
On the LME lead side, the Middle East conflict recently reversed again, with overseas bulls withdrawing and bears adding positions. LME lead fell below all moving averages, reaching a new low in nearly one and a half months. Meanwhile, tightness in spot cargo in markets outside China persists. LME saw a backwardation structure again, with LME Cash-3M quoted at $4.97/mt. Next week, attention will be on the impact of the US Fed meeting on the US dollar index. Lead prices are expected to continue trading in the doldrums, with LME lead trading in the range of $1,915-1,975/mt.
On the SHFE lead side, next Monday is the delivery day for the SHFE lead 2606 contract. Suppliers shipping to delivery warehouses will boost expectations of rising visible inventory, especially as SHFE lead bears add positions. Open interest in the most-traded contract has reached as high as 85,000 lots, putting lead prices under pressure. Notably, in-factory inventory at primary lead enterprises has declined, and secondary lead smelters are suffering severe losses. Fundamentals provide strong support, with the spread between futures and spot prices narrowing rapidly and a premium cannot be ruled out. Downside risk to lead prices is expected to persist, but there is a chance to dip and rebound. Next week, the most-traded SHFE lead contract is expected to trade in the range of 15,850-16,300 yuan/mt.
Spot price forecast: 15,900-16,150 yuan/mt. Demand side, production at lead-acid battery enterprises is relatively stable. After the lead price decline, downstream enterprises buy the dip as needed. Also, considering the potential for mid-year account closing and stocktaking in late June, some downstream players purchase in advance. Supply side, production at primary and secondary lead enterprises both increased and decreased. Supply differences are expected to be relatively small. In-factory inventories at both have fallen, reducing smelters' pressure to sell. Especially as secondary lead smelters suffer severe losses, their willingness to sell is low. Spot lead is expected to maintain small premiums (over SMM #1 lead) on shipments. If SHFE lead falls further, the possibility of spot prices exceeding futures cannot be ruled out.
![SHFE Lead Breaks Through Bollinger Upper Track, Pulls Back Under Pressure and Stays High Consolidating on a Strong Note [Brief Review of Lead Futures]](https://imgqn.smm.cn/usercenter/qnyHQ20251217171721.jpeg)
