Frequent Discussions on Environmental Protection and Holidays in the Lead Market, with Future Transactions Expected to Focus on Consumption [SMM Weekly Forecast for the Lead Market]

SMM, December 27: Next week, domestic and overseas markets will observe the New Year holiday. On December 31, the LME plans to close early at 20:30, while the SHFE will suspend night session trading. Both domestic and overseas markets will be closed on January 1, and normal trading will resume on January 2. There will be limited macroeconomic data releases, mainly including China's December official manufacturing PMI, the Eurozone's December final manufacturing PMI, and the US December ISM manufacturing PMI.

Regarding LME lead, trading on the futures market was relatively sluggish due to the Christmas holiday. The downward trend in LME lead inventory offset the suppressive effect of a stronger US dollar, resulting in a consolidating trend for LME lead. During this period, the LME cash-3M contango narrowed, with a quote of -$21.28/mt as of December 24, which may provide some support for lead prices. Lead prices are expected to test lower levels before rebounding next week, with LME lead forecast to range between $1,945/mt and $2,015/mt.

For domestic SHFE lead, both supply and demand in the domestic market are expected to increase next week. The impact of environmental protection on the supply side is fading, and there is a forecast for a slight increase in supply after the New Year holiday. On the demand side, downstream enterprises are expected to resume regular procurement and engage in pre-Chinese New Year stockpiling as year-end account settlements and inventory checks conclude. If demand materializes as expected, lead prices may test lower levels before rebounding. The most-traded SHFE lead contract is expected to range between 16,650 yuan/mt and 17,150 yuan/mt next week.

Spot price forecast: 16,700–17,150 yuan/mt. After the New Year holiday, downstream enterprises are expected to resume regular procurement, with increased enthusiasm for purchasing lead ingots compared to late December. Meanwhile, the impact of environmental protection on the primary and secondary lead markets is weakening. Attention should be paid to the progress of smelter resumption in early January. The high premiums for primary lead may ease, while secondary lead requires monitoring of battery scrap supply and price levels, which affect secondary lead profits. Secondary refined lead is likely to trade near parity.

According to the SMM model, the forecast price range for SMM #1 refined lead average price is [16,975, 17,475], with an extreme price range of [16,760, 17,730], a normal price range of [16,900, 17,560], and a conservative price range of [17,050, 17,390]. The support range is [16,900, 17,050], and the resistance range is [17,390, 17,560].

The model forecasts the LME electronic lead closing price range from this Friday to next Thursday to be [1,945, 2,045], with an extreme price range of [1,910, 2,090], a normal price range of [1,930, 2,060], and a conservative price range of [1,960, 2,030]. The support range is [1,930, 1,960], and the resistance range is [2,030, 2,060].

The model forecasts the closing price range for the most-traded lead contract from this Friday to next Thursday to be [17,035, 17,600], with an extreme price range of [16,810, 17,870], a normal price range of [16,960, 17,690], and a conservative price range of [17,110, 17,510]. The support range is [16,960, 17,110], and the resistance range is [17,510, 17,690].