Domestic supply tightness versus import expectations, lead prices may remain hover at high levels

In the week ending July 19, key macroeconomic data include China's Q2 GDP YoY, China's June total retail sales YoY, China's June industrial output above designated size YoY, China's June total electricity consumption YoY, and the US June retail sales MoM. Additionally, the US Fed will release the Beige Book on economic conditions.
For LME lead price, it showed a trend of moving downwards after a higher opening in the week ending July 12. During the week, amid the decline in LME lead inventory and the widening of the LME lead 0-3 contango, the decline in lead prices slowed in the latter half of the week. Notably, the decline in LME lead inventory mainly occurred in Singapore warehouses, coinciding with the opening of China's lead ingot import window. It is necessary to closely monitor the actual flow of lead ingot supply. If inventory continues to decline, lead prices may rebound, with LME lead expected to trade between $2,150-2,235/mt in the week ending July 19.
For SHFE lead, domestic ingot supply is relatively tight, and spot primary and secondary lead are mostly traded at a premium. Meanwhile, the SHFE/LME lead price ratio further expanded, increasing the profit of lead ingot imports. The market is experiencing intense competition between bullish and bearish factors, and lead prices are expected to remain in a high-level consolidation trend. July 15 is the delivery day for the SHFE lead 2407 contract, and lead ingot delivery sources will be transferred to warehouses, which may pressure lead prices. However, due to the high cost of raw materials such as battery scrap, cost support factors still exist. The most-traded SHFE lead contract is expected to trade between 19,300-19,750 yuan/mt in the week ending July 19.
Spot price forecast: 19,350-19,650 yuan/mt. Supply side, primary and secondary lead smelters' production will see both increases and decreases, with overall supply expected to remain largely unchanged. It is understood that current primary lead producers have low inventories and are pre-selling and scheduling shipments, so spot will continue to be sold at a premium. Secondary lead producers will consider scrap costs, and mainstream smelters are expected to maintain firm prices, but regional price differences are expected to remain due to some smelters using imported crude lead. Demand side, downstream companies will mainly purchase on a need basis, and attention should be paid to changes in spot demand after the completion of long-term lead ingot orders in mid-to-late July.