Lead Prices Expected to Dip and Then Rise This week

This week, key macroeconomic data include the final value of the US annualised Q1 real GDP, the US annualised May core PCE price index, the US May personal spending, and the final value of the US June University of Michigan consumer sentiment index. In China, attention should be paid to the progress of environmental inspections in Anhui.

For LME lead, inventories continued to accumulate, increasing by 28,500 mt last week, while the contango of LME lead 0-3 remained, both putting pressure on LME lead prices. The expectation of reopening of the import window for lead ingots is rising. With the import window gradually opening for from lead concentrate to crude lead, lead prices can move at highs. LME lead is expected to trade between $2,150-2,250/mt this week.

For SHFE lead, domestic scrap supply issues are affecting lead ingot supply, with production cuts in the secondary lead sector spreading. Due to high scrap costs, the price of secondary refined lead has exceeded primary lead. Domestic lead ingot inventories are depleting, and the tight supply logic supports a continued strong lead price trend. Additionally, attention should be paid to the opening of the lead ingot import window and actual shipments arrivals, as the import volume will determine whether the tight domestic supply situation can ease. SHFE lead is expected to trade between 18,450-19,250 yuan/mt this week.

Spot price forecast: 18,600-19,100 yuan/mt. For primary lead, more smelters are undergoing maintenance, and inventories of deliverable brands companies are relatively low, making it difficult to narrow the price difference between deliverable and non-deliverable brands in the short term. For secondary lead, the tight supply of battery scrap remains unchanged, and secondary lead smelters are operating at a loss. With insufficient raw materials, supply recovery is unlikely, and the price of secondary lead will continue to exceed price of primary lead. Downstream companies maintain on-demand procurement, with large companies remaining the main purchasing force, but attention should be paid to the possibility of mid-year inventory checks interrupting procurement.

According to the SMM model, the average price range for SMM #1 lead ingots is [18,430, 19,240] yuan/mt, with an extreme price range of [17,980, 19,600] yuan/mt, a normal price range of [18,280, 19,360] yuan/mt, and a conservative price range of [18,580, 19,120] yuan/mt. The support range is [18,280, 18,580] yuan/mt, and the resistance range is [19,120, 19,360] yuan/mt.

The expected price range for the closing price of the most-traded SHFE lead contract is [18,490, 19,515] yuan/mt, with an extreme price range of [18,000, 19,910] yuan/mt, a normal price range of [18,330, 19,650] yuan/mt, and a conservative price range of [18,650, 19,380] yuan/mt. The support range is [18,330, 18,650] yuan/mt, and the resistance range is [19,380, 19,650] yuan/mt.