Next Monday, due to the Spring Bank Holiday, the LME will be closed for the day. Meanwhile, China will celebrate the Dragon Boat Festival, and the SHFE will not conduct night session trading on Friday evening. The key macroeconomic data includes the US April core PCE price index year-on-year, the US May University of Michigan consumer sentiment index final value, and the US May one-year inflation expectations final value. Additionally, the US Fed will release the minutes of its May monetary policy meeting.
Regarding LME lead, this week, LME lead inventory surged by 50,000 mt for two consecutive days, bringing the total inventory to 295,800 mt, the highest level since January 18, 2013. Meanwhile, the LME lead cash-3M contango widened rapidly, reaching -$22.37/mt as of May 22. The accumulation of inventory has weighed on lead prices, while the US dollar index fell below the 100 mark, providing some relief for non-ferrous metals. Next week, attention will be paid to new signals from the Fed meeting regarding subsequent interest rate changes. It is expected that lead prices will maintain a consolidation trend, with LME lead trading within the range of $1,955-2,005/mt.
Domestically, after the SHFE lead delivery, supplies have re-entered the market. Downstream enterprises are purchasing based on demand, and the visible inventory of lead ingots has declined, providing some room for lead prices to rebound. Additionally, secondary lead smelters have recently collectively lowered their scrap battery collection prices. The easing of scrap costs has led traders to increase their short positions significantly, causing the center of lead price movement to shift downward compared to the previous week. It is understood that the commissioning and production resumptions of new secondary lead capacities are gradually advancing, further increasing the demand for scrap materials. Against this backdrop of strong demand, the cost factors of secondary lead provide strong support. It is expected that lead prices will continue to fluctuate rangebound, with the most-traded SHFE lead contract trading within the range of 16,600-17,000 yuan/mt.
Spot price forecast: 16,600-16,800 yuan/mt. For primary lead, smelter production remains relatively stable. Coupled with the re-entry of delivery supplies into the market, the supply in the spot market is loose, and spot transactions are expected to remain at a discount. For secondary lead, the passive easing of scrap battery prices has led to actual transaction negotiations. Meanwhile, the arrival of imported crude lead has alleviated the raw material supply imbalance for some smelters, with supply expectations increasing. There are significant differences in smelters' willingness to sell, and transactions of secondary refined lead are expected to maintain a state of coexisting premiums and discounts. Regarding lead consumption, the market demand for lead-acid batteries is weak. Downstream enterprises are generally producing based on sales, with some showing willingness to purchase at lower prices. If lead prices fall further, there may be a short-term increase in procurement volume.
