Key economic data due this week mainly includes the revised annualised quarterly US real GDP in the fourth quarter, the annualised core PCE price index in January, the monthly personal expenditure rate in January, the core PCE price index in January, the one-year inflation rate expectation in February, and Caixin manufacturing PMI for China in February. Last week the Federal Reserve released the minutes of its first monetary policy meeting in 2024. The minutes of the meeting showed that the US federal funds rate may have reached its peak, but it stated that there are risks in relaxing the monetary policy stance too early. We will continue to pay attention to the FOMC voting committee's statement on the timing of interest rate cuts.
In terms of LME lead, after the overseas lead market ended three consecutive weeks of inventory accumulation, with the total inventory accumulation reaching nearly 70,000 mt, the LME lead inventory fell by 1,975 mt during the week. LME0-3 maintained a small backwardation, standing at $10.29/mt as of February 22. LME lead prices are expected to run at $2,045-2,125/mt this week.
In terms of domestic SHFE lead, the lead market has gradually recovered after CNY holiday. However, the lead inventory generated during the holiday has been slowly consumed, putting lead prices under pressure. From the perspective of raw material supply, the supply of lead concentrates and scrap materials is limited. The price reduction of battery scrap dragged down the recycling volume. As the production of downstream enterprises of lead gradually resumes, the expected replenishment of the inventory may support the price of lead. The most active SHFE lead contract prices are expected to stand between 15,800-16,150 yuan/mt this week.
The spot prices are expected to move between 15,650-16,000 yuan/mt. In terms of primary lead and secondary lead, large smelters continue to produce as usual, and companies that were closed for CNY are also gradually resuming production. Secondary lead companies will gradually contribute to production after the Lantern Festival (February 24), and lead supply is expected to increase. In terms of lead consumption, in the first week after the holiday, most lead-acid battery companies initially completed the resumption of production, and subsequent production operating rates will increase.
