Next week, overseas markets will close early on December 24 and be closed on December 25 due to the Christmas holiday. There are few major macroeconomic data releases, such as China's 1-year loan prime rate on December 22, and the US preliminary Q3 real GDP annualized quarter-on-quarter growth rate and preliminary Q3 core PCE price index annualized quarter-on-quarter growth rate. The holiday atmosphere is strong in overseas markets, and lead market participants need to focus more on changes in the Chinese market.
For LME lead, after the LME announced position limits at the start of the week, suppliers accelerated shipping to delivery warehouses, leading to a significant increase of 27,000 mt in LME lead inventory. LME lead prices fell to a nearly 7-month low. During this period, the LME lead Cash-3M contango narrowed to -$43.93/mt. Simultaneously, strike risks emerged at an Australian lead smelter, the US is set to add new lead smelting projects, and silver prices repeatedly hit new highs, further increasing demand for lead concentrates. Bullish and bearish factors are intertwined, and LME lead is expected to trade between $1,950/mt and $1,990/mt next week.
Domestically, for SHFE lead, social inventory of lead ingots is at a 15-month low, and smelter inventory is also low, providing some support to lead prices. Supply-side dynamics are mixed, with primary lead smelters resuming production after maintenance, while secondary lead smelters are cutting production due to factors like raw materials and environmental protection. Additionally, as the year-end approaches, some upstream and downstream enterprises are closing their books, and spot market trading activity is expected to gradually decline next week. The most-traded SHFE lead contract is forecast to trade between 16,750 yuan/mt and 17,100 yuan/mt.
Spot price forecast: 16,750-17,000 yuan/mt. For primary lead, major delivery brand smelters have resumed production, but environmental protection factors persist in some regions. Considering the low base of smelter inventory, suppliers are expected to continue holding prices firm. For secondary lead, falling lead prices are squeezing secondary refined lead producers' profits, and some regional smelters are cutting production, making it difficult to widen the discount for secondary refined lead. On the consumption side, downstream enterprises' purchasing enthusiasm is waning near year-end, and there is a tendency to recall funds. Spot trading activity is expected to weaken.
