Lead Prices Might Follow Macro Logic Next Week amid weak Consumption and Cost Support

Next week coincides with the traditional Mid-Autumn holiday in China, and the SHFE will be closed from September 14 to 17, 2024. Additionally, the US Fed will hold its September interest rate meeting next week. The focus of this meeting is that the US Fed will resume rate cuts for the first time in nearly four years, with most of the market betting on a 25 basis points rate cut in September.
Regarding LME lead, the overseas fundamentals have not changed much recently, and macro sentiment towards the lead market has risen. Especially with the upcoming September US Fed interest rate meeting, mixed US economic data has led the market to speculate on the extent of the Fed rate cut, which also affects the non-ferrous metals market. Moreover, overseas lead inventory is on a declining trend, and the LME lead 0-3 discounts have narrowed WoW, which may support LME lead to fluctuate upward. It is expected that LME lead will operate in the range of $1,975-2,100/mt next week.
Domestically, regarding the most-traded SHFE lead contract, due to the Mid-Autumn holiday, there will be only three trading days next week, and September 18 is the delivery date for the most-traded SHFE lead 2409 contract. During the Mid-Autumn Festival, many lead-acid battery enterprises plan to take holidays, generally for 1-3 days, while smelters, aside from maintenance, will basically maintain normal production, leading to an expected inventory accumulation in the lead market post-holiday. Additionally, due to the SHFE lead delivery factor, lead prices and inventory will transfer to the delivery warehouse, and the increase in visible inventory may suppress lead price rise potential. It is expected that the most-traded SHFE lead contract will run in the range of 16,500-17,150 yuan/mt next week.
Spot price forecast: 16,350-16,850 yuan/mt. For primary lead, some smelters will maintain maintenance, and due to the delivery factor of the most-traded SHFE lead 2409 contract, cargo holders will transfer inventories to the warehouse, reducing the supply in the spot market, thereby narrowing spot discounts which may remain stable. For secondary lead, with the easing of battery scrap prices and the rise in lead prices, the loss in the secondary lead sector will be restored, and the output of smelters is expected to increase, potentially resolving the price inversion between secondary refined lead and primary lead. Regarding lead consumption, the terminal consumption in the lead-acid battery market is generally average, and downstream enterprises will still maintain a restock as needed mode post-holiday.