Environmental protection-driven production cuts and traffic restrictions were lifted, focus on consumption recovery this week

This week, the macroeconomic data mainly include the final value of the US November University of Michigan Consumer Confidence Index, the preliminary value of the US November one-year inflation rate expectation, the final value of the Eurozone October CPI annual rate, and the preliminary value of the Eurozone November Manufacturing PMI. Additionally, Brazil will hold the G20 summit on November 18-19.

For LME lead, the fundamentals are mediocre, while the US dollar has risen strongly, hitting a new high in over a year, causing base metals to generally weaken, with LME lead also falling to a nearly two-month low. During this period, the LME lead 0-3 contango narrowed, reporting at $37.98/mt as of November 14; LME lead inventory continued its downward trend. Once the bearish macro sentiment is fully released, lead prices may stabilize after stopping the decline. It is expected that LME lead will operate in the range of $1,945-2,045/mt this week.

For domestic SHFE lead, the pressure of inventory buildup amid delivery has intensified, causing lead prices to fall under pressure. This week, we need to focus on the resumption progress of secondary lead enterprises and the changes in spot premiums for secondary refined lead; the impact on primary lead premiums after delivery brands re-enter the market after the lead delivery ends. Additionally, battery enterprises have a moderate operating rate, and after the lead price falls, downstream enterprises’ restocking as needed may reappear. It is expected that the most-traded SHFE lead contract will operate in the range of 16,550-17,050 yuan/mt this week (considering the factor of most-traded contract rollover).

Spot price forecast: 16,500-16,900 yuan/mt. The supply of primary lead has not changed much, and more attention needs to be paid to the increase in circulating supply after delivery and its impact on spot premiums; for secondary lead, attention needs to be paid to the resumption of smelters, and after the supply increases, the spot premiums for secondary refined lead are expected to be lowered. Additionally, in the lead consumption sector, downstream enterprises' production is stable, and after the risk of sharp lead price fluctuations is eliminated, downstream enterprises may restock as needed.