Lead prices to remain rangebound at lows in the near term amid positive and negative factors

Spot fundamentals:

In the lead spot market yesterday, SHFE lead stopped falling and rebounded. Sellers maintained high prices for shipments, and some raised their premiums. At the same time, the difference between quotations of smelters between the north and the south narrowed. Among them, discounts in South China decreased, and downstream companies purchased on demand. Due to the loose supply of goods in the market and more price negotiations, the transaction activity in the bulk order market was slightly better, and the transactions were biased towards supply from refineries. In terms of primary lead, the inventories of lead smelting companies are gradually being digested, but the overall supply is still relatively loose. The average price of SMM1# lead under bulk orders ranged from a discount of 75 yuan/ton to a premium of 75 yuan/ton ex-factory. The actual transaction was at a discount; in mainstream trading markets such as Jiangsu, Zhejiang and Shanghai, the mainstream quotation of domestic lead was 20-50 yuan/ton higher than the SHFE lead 2403 contract; in terms of secondary lead, some small and medium-sized smelting enterprises have contributed to production after resuming production, and the market supply has increased. As battery scrap prices rose, the average price of secondary refined lead was quoted at a discount of 50 yuan/ton to a premium of 50 yuan/ton for SMM1# lead before ex-factory.

Lead price forecast:

On the macro front, Fed officials emphasized that the pace of interest rate cuts is guided by data, and the path may be different from previous cycles. Three Fed officials said the pace of rate cuts depends on incoming economic data, suggesting the path to lower borrowing costs may differ from previous rate-cutting cycles. The annualized real GDP of the United States in the fourth quarter was slightly revised down to 3.2%, lower than expected, and the core PCE was unexpectedly slightly revised up to 2.1%.

In terms of fundamentals, against the background of the increase in supply and demand of lead ingots in the domestic post-holiday market, lead smelting companies are advancing in resumption of production, the operating rates of downstream companies are climbing, and the spot market transactions are active and improving. In addition, due to the remaining factors of high inventory during the Spring Festival, lead consumption performance is moderate, which is not enough to achieve rapid destocking, and lead prices are under upward pressure. Furthermore, the supply of lead concentrate and scrap materials is limited. After lead smelting companies resume production, the demand for battery scrap and other raw materials has increased, and the cost of raw materials is expected to rise. With intertwined positive and negative factors, lead may continue to remain rangebound.