Macro Complexity and Fundamental Stalemate: Lead Prices Are Expected to Consolidate While Awaiting New Developments [SMM Lead Market Weekly Forecast]

         Next week is the last week before the Labour Day holiday. SHFE and other exchanges will suspend night session trading on April 30. Meanwhile, Vietnam will have one day off each on April 27 for Hung Kings' Day and April 30 for Reunification Day. Some exchanges in other Southeast Asian and European regions will be closed on May 1. Macro economic data side, China's April official manufacturing PMI, the US March core PCE price index year-on-year, and the US April ISM manufacturing PMI are about to be released. In addition, the US Fed will hold an interest rate meeting next week, and the market expects rates to remain unchanged this time.

LME lead side, LME lead inventory continued its downward trend this week. LME Cash-3M shifted from contango to backwardation, but the backwardation structure was a "one-day wonder," largely driven by rising spot premiums in Southeast Asia. After spot premiums in Southeast Asia reached exceptionally high levels (190-200 $/mt), downstream enterprises temporarily halted purchases, and spot transactions weakened notably, causing some low-grade lead ingot premium offers to reverse and decline. Fundamental positives were largely priced in, and going forward we need to pay more attention to developments in Middle East geopolitical tensions. LME lead is expected to trade in the range of $1,940-2,000/mt next week.

SHFE lead side, with the Labour Day holiday approaching, most downstream enterprises plan to take holidays. There may be some rigid-demand stockpiling expectations before the holiday, but the seasonal decline in lead consumption caused by the holiday will have a more prominent impact. Meanwhile, both secondary lead and primary lead smelters are undergoing more maintenance, and overall lead ingot supply and demand are declining in tandem. Lead prices are expected to continue their volatile trend before the holiday. The most-traded SHFE lead contract is expected to trade in the range of 16,550-16,950 yuan/mt next week.

Spot price forecast: 16,400-16,700 yuan/mt. Supply side, the impact of production cuts or maintenance at secondary lead smelters is expanding. Supply tightens notably on a regional basis, especially in east China. Meanwhile, primary lead smelter inventory turned lower, spot circulation volumes remained limited, and spot cargo in some regions will maintain a slight premium. Consumption side, downstream enterprises are about to take the Labour Day holiday, and there may be some stockpiling expectations before the holiday.