Next week, key macroeconomic data include the US July ISM Manufacturing PMI, ADP employment change, unemployment rate, and seasonally adjusted nonfarm payrolls. As recent cooling inflation has dampened rate hike expectations, the US dollar index consolidates around the $100 level, with market awaiting guidance from employment data. Additionally, Iran rejected a proposal for joint management of the Strait of Hormuz, and the US announced the completion of a new round of military operations targeting Iranian objectives, reigniting market concerns over easing geopolitical conflicts.
For LME lead, LME lead inventory continued its downward trend, while LME lead Cash-3M contango widened further, with the latest quote at -$41.15/mt. Currently, geopolitical conflict risks persist outside China; lead consumption in the Middle East shows no recovery expectations, while lead consumption in Southeast Asia is steadily rising with spot premiums climbing again. Lead ingot (Pb≥99.99%) CIF premium was quoted at a super high $240/mt, which will support an upward shift in lead price center to some extent. Next week, LME lead is expected to trade at $1,880-1,925/mt.
For SHFE lead, there are no expectations for improvement in lead consumption in August yet. Cautious procurement by downstream enterprises and accumulating lead ingot inventory have dragged lead prices to consolidate on a subdued note. Meanwhile, increased maintenance and production cuts at primary and secondary lead smelters, along with supply tightening expectations, have narrowed spot lead discounts, providing strong support for lead prices. Next week, the most-traded SHFE lead contract is expected to trade at 15,500-15,850 yuan/mt.
Spot lead price forecast: 15,350-15,600 yuan/mt. Entering August, a new round of delivery for SHFE lead is on the agenda, with lead ingots moving from smelter warehouses to social warehouses. Market supply of circulating cargo is expected to decrease, and suppliers' willingness to sell at discounts may further decline. If lead prices continue to consolidate at lows, spot premiums for both primary and secondary lead are expected to persist.
