Lead Prices to Open High and then Fall This Week

SHANGHAI, Feb 6 (SMM) - There will not be solid macro data this week. The one-year inflation expectations in the United States and the annualised CPI in China in January are due this week. The public speeches of Federal Reserve Chairman Powell and voting commission after the interest rate meeting will be the focus of markets.

LME lead inventories changed little during CNY holidays, remaining at a 15-year low. Recently, overseas smelters have successively announced their production and sales performance in 2022. Some enterprises reported falling output due to the high cost last year. The current high energy and labour costs are still one of the factors restricting the increase in the output of lead and zinc smelters, which also provide cost support for the lead prices. Interest rate hikes by overseas central banks will restrict economic recovery in the near term. There were no news of significance on the fundamentals. LME lead prices are expected to hover at lows, moving between $2,085-2,185/mt.

As the time of closures for Chinese New Year varied across upstream and downstream enterprises, most primary lead and secondary lead smelters have a certain amount of inventory after CNY holiday. The accumulation of inventory has kept lead prices at a low level. At present, there are large differences in regional supply and demand, and the social inventory of lead ingots has begun to decline. The lead prices were close to the break-even point of secondary lead smelters. There is a certain support at the 15,000 yuan/mt mark. This week, the production of upstream and downstream enterprises will further resume, and the lead market is expected to improve. The market is awaiting the expectations of downstream stockpiling to pay off after CNY holidays. At the same time, we need to pay attention to the possibility of deliverable brands being shipped to SHFE warehouses. SHFE lead prices are likely to rise before falling this week. The most active SHFE lead contract is expected to trade between 15,100-15,450 yuan/mt this week.