Next Monday, the US will observe Labor Day, with the NYSE, CME, and other exchanges closed for the day. On the macroeconomic data front, key releases include China's August CPI YoY, the US August unadjusted CPI YoY, and the preliminary University of Michigan one-year inflation expectations for September. With less than two weeks until the US Fed's September 15-16 policy meeting, the market is nearly evenly split on whether a rate hike will occur, while Fed officials' remarks show significant divergence. Next week's inflation data will be a key directional indicator.
For LME lead, LME lead inventories continued their downward trend, but the LME lead Cash-3M contango narrowed first and then widened, most recently reported at -$39.12/mt, providing limited support for lead prices. Meanwhile, supply of high-grade lead ingots in the Southeast Asian market remained tight, while downstream buyers were unable to accept higher prices. The market saw periods of quoted prices with no transactions, and some downstream buyers turned to slightly lower-grade lead ingots to meet production needs. In the Indian market, some lead smelters were slow to resume production, and delayed delivery issues showed no improvement yet. In the short term, fundamentals provide limited boost to lead prices, and attention should be paid to the US dollar index's movement for price direction. Next week, LME lead is expected to trade in a range of $1,890-1,925/mt.
For SHFE lead, social inventory of lead ingots rose, and lead prices pulled back under pressure. Primary lead delivery brand smelters remained in maintenance, limiting spot market supply. Additionally, market expectations for downstream enterprises' stockpiling ahead of the Mid-Autumn Festival and National Day holidays served as strong support for lead prices. Furthermore, secondary lead production resumptions and imported lead impact created multiple mutually constraining factors. Next week, lead prices are expected to continue consolidating at highs, awaiting the realization of consumption expectations. The most-traded SHFE lead contract is expected to trade in a range of 15,950-16,350 yuan/mt.
Spot lead price forecast: 15,850-16,150 yuan/mt. On lead consumption, end-use consumption showed limited improvement, with downstream enterprises maintaining produce-based-on-sales and purchasing raw materials primarily as needed. On the supply side, primary lead maintenance and secondary lead production resumptions proceeded in parallel, with the changes in both creating notable divergence in smelter shipments. During this period, the price spread between secondary lead and primary lead widened. Before primary lead enterprises collectively resume production, spot lead is expected to continue trading at a small premium to the SMM #1 lead average price.
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