Next week, the market will see the release of important macroeconomic data, including the US June unadjusted CPI annual rate, China’s Q2 GDP annual rate, and the US June PPI annual rate. Additionally, the US Fed will release the Beige Book on economic conditions. It is reported that the US launched a new round of strikes against Iran this week, leading to a sharp drop in shipping traffic through the Strait of Hormuz, but a US official indicated that both sides are still holding “technical negotiations” on the nuclear issue. Mixed macro signals are expected to continue disrupting base metal market trading. LME lead, affected by ongoing macro disruptions, continued its consolidation pattern. Meanwhile, the decline in LME lead inventories slowed, and LME Cash-3M contango widened further, with the latest quote at -$44.34/mt. Additionally, in Southeast Asia, high-grade lead ingots maintained a high premium, while trading for low-grade material was difficult, and polarization persisted. With the interplay between high inventories and high premiums and no new drivers emerging, LME lead is expected to maintain a range-bound consolidation pattern, trading within $1,885-1,915/mt. SHFE lead, driven by production cuts at smelters alongside increased downstream cargo pick-up, continued destocking of lead ingot inventories, providing certain support to lead prices this week. However, next week, as the most-traded SHFE lead 2607 contract approaches delivery, some on-site inventory may shift to delivery warehouses, making sustained destocking of lead ingots unlikely. Attention should be paid to the pace of invisible inventory converting to visible inventory and the risk of lead prices retreating after rapid rises. The most-traded SHFE lead contract is expected to trade within 15,900-16,250 yuan/mt next week. Spot lead price forecast: 15,850-16,050 yuan/mt. On the demand side, lead-acid battery market demand was relatively weak, with downstream enterprises producing based on sales and maintaining limited demand for lead ingots. On the supply side, primary lead smelters had expectations of resuming production after maintenance, while secondary lead smelters saw increasing maintenance. The production divergence is expected to make secondary lead prices outperform primary lead, reducing the likelihood of secondary refined lead trading at spot discounts. In the primary lead market, focus will remain on the reduction in available spot supply due to delivery and its impact on spot discount levels.

Next week, the main macroeconomic data to be released include China's June CPI annual rate and the US June ISM non-manufacturing PMI. This week, US non-farm payrolls data came in far below the previous value and expectations, cooling market expectations for a US Fed interest rate hike. The US dollar index may return to a weak range of fluctuation. Although the prospects for US-Iran peace talks remain unclear, the gradual recovery of shipping and maritime transport and the decline in crude oil prices indicate that supply chain markets are recovering. In addition, it should be noted that the US Fed will release the minutes of its monetary policy meeting next week. For LME lead, high lead ingot inventory outside China is the biggest bearish factor in current market trading, especially as LME lead prices fell, the LME lead Cash-3M contango did not narrow but widened, with the latest quote at -$37.79/mt. Fundamental news was mediocre, providing limited support for prices. In the near term, we need to pay more attention to the US dollar index trend and the new developments from next week’s US Fed meeting, and their impact on the metals market. LME lead is expected to trade in the range of $1,865-1,915/mt next week. For SHFE lead, this week, amid a carnival for bears, SHFE lead fell to a more than two-year low, causing lead smelters’ losses to widen and forcing secondary lead enterprises to cut or suspend production again. Bears then began to exit, and lead prices stopped falling and rebounded. Going forward, we need to monitor downstream enterprises’ purchasing trends. If lead ingot destocking materializes, lead prices may continue to rebound; otherwise, we should remain vigilant about bearish funds that have not exited. Next week, the most-traded SHFE lead contract is expected to trade in the range of 15,800-16,100 yuan/mt. Spot Price Forecast: 15,750-16,000 yuan/mt. Consumption side, the off-season trend in July remains unchanged. However, after large enterprises complete their semi-annual inventory checks and account closing, they will resume regular purchasing, which may bring some purchasing expectations. Supply side, primary lead enterprises are about to resume production after maintenance, turning supply expectations upward. Meanwhile, secondary lead enterprises are in a state of production cuts, leading to regional supply constraints. If lead prices continue to rebound next week, we need to watch for the possibility of secondary lead production resuming as losses are repaired. Spot lead is expected to remain in contango trading.

SMM July 1 news: Overnight, the LME 3-month lead contract opened at $1,890.5/mt. Early in the session, prices consolidated repeatedly, rising intraday to $1,898/mt. Subsequently, upward momentum from bulls faded, and prices drifted lower. The decline accelerated during the European session, with prices dropping to $1,871/mt. Towards the close, they stabilized and rebounded slightly, finally closing at $1,872/mt, recording a bearish candlestick. The contract fell $20.5/mt, a decrease of 1.08%. Overnight, SHFE lead contract 2608 opened slightly lower at 16,040 yuan/mt. After briefly rising to 16,065 yuan/mt at the open, bulls lost steam, bears stepped in, and prices continued to pull back, dropping to an intraday low of 15,950 yuan/mt. At the low, slight buying support prompted a minor rebound, and the contract finally closed at 15,975 yuan/mt, falling 75 yuan/mt, a decrease of 0.47%. Trading volume expanded, and open interest increased slightly by 238 lots. The trend retreated after a rapid rise, remaining generally weak. Expectations for US Fed interest rate hikes continue to suppress lead prices from a macro perspective. Although LME inventory pulled back slightly, the ex-China Q2 consumption off-season brings bearish demand factors. In China, primary smelters implemented minor production cuts due to ore supply constraints, while secondary smelters, hampered by losses and scrap battery raw material shortages, operated at lower rates, resulting in weak supply and demand in the market. Downstream users maintained a wait-and-see sentiment, only engaging in dip-buying on an as-needed basis. Short-term lead prices are likely to stay in the doldrums.

SMM, June 26: This week, the LME lead contract opened at $1,956.5/mt, staying high and consolidating in early trading and peaking at $1,966/mt. It then came under broad pressure, beginning a persistent downtrend, tumbling to a low of $1,903/mt intraday with a notable surge in volume. Prices saw minor, choppy back-and-forth moves at the week’s lows, stabilizing slightly and edging up near the week’s end to close at $1,907.5/mt. The contract lost $49/mt for the week, a decline of about 2.5%, tracing a one-sided drift lower throughout the week. The most-traded SHFE lead 2608 contract opened the week at 16,420 yuan/mt, then quickly slid right after the open. Its center shifted steadily lower during the week, dipping to an intraday low of 16,170 yuan/mt and overall drifting lower along and below the moving average. On Friday, it hit bottom intraday, staged a modest repair rebound, and saw a slight pickup in volume near the close, ending at 16,280 yuan/mt. The contract fell about 170 yuan/mt for the week – a loss of 1.03% – and formed a bearish candlestick.

Next week, several key economic data will be released, mainly including China's official manufacturing PMI for June, the US June ADP employment figure, the US June unemployment rate, and the US June seasonally adjusted non-farm payrolls. Recently, US-Iran diplomacy achieved a phased breakthrough, with both sides signing a memorandum of understanding, leading to the reopening of the Strait of Hormuz to shipping and the recovery of crude oil and other supplies. However, conflicts along the Lebanon-Israel border have been recurring, and the ceasefire agreement remains fragile, necessitating cautious optimism. Additionally, short-term inflation data and hawkish signals pushed up expectations for US Fed interest rate hikes, while market views diverged and conflicted, requiring closer attention to next week's economic data outcomes. As for LME lead, affected by the lifting of shipping restrictions in the Middle East and expectations for US Fed interest rate hikes, market bearish sentiment surged, and LME lead prices fell continuously, nearly breaking below $1,900/mt. While lead prices were declining, the LME Cash-3M contango widened, with the latest quote at -$33.6/mt. Notably, LME lead inventories have been on a downtrend for four consecutive weeks, with total inventories dropping below 300,000 mt, the latest figure at 297,500 mt. It is expected that short-term macro risk factors still exist, and fundamental factors present contradictions. Lead prices are expected to remain in the doldrums, with LME lead forecast to trade between $1,875 and $1,945/mt. As for SHFE lead, entering July, with the semiannual capital repatriation factor removed, upstream and downstream enterprises will resume regular trading. Meanwhile, supplies of lead concentrates and scrap batteries remain constrained, with secondary lead enterprises incurring significant losses. Production resumptions have been delayed, and there are additional production cuts. Coupled with the persistent inversion between secondary and primary lead prices, these factors will provide support for lead prices in the short term. However, we also need to be vigilant about macro bearish factors, with lead prices expected to be in the doldrums, while watching the lead ingot import window. The most-traded SHFE lead contract is expected to trade between 15,950 and 16,400 yuan/mt. Spot price forecast: 15,950-16,250 yuan/mt. Before the end of June, some large downstream enterprises will close accounts and take inventory, which will continue to disrupt trading activity for lead ingots. Once July arrives, the lead market will return to normal trading. In some regions, transactions for primary lead at a significant contango (against SMM#Pb) are expected to decrease, or the contango will narrow. On the secondary lead side, constrained by losses, smelters' shipments are limited, and some enterprises already have inventory buildup. If arrivals of imported lead increase to supplement supply, it cannot be ruled out that secondary refined lead may turn to widen the contango.

SMM June 23: The most-traded SHFE lead 2608 contract opened at 16,420 yuan/mt during the day. In the morning session, prices fluctuated slightly around the intraday moving average, then weakened and fluctuated downward, dipping to an intraday low of 16,315 yuan/mt. In the afternoon, futures gradually recovered and rebounded, with prices steadily approaching the average line. Near the end of the session, the contract moved sideways in a narrow range of 16,370–16,400 yuan/mt and finally settled at 16,385 yuan/mt, recording a small bearish candlestick, down 65 yuan/mt or 0.4%. The SHFE lead 2607 contract recorded a trading volume of 29,824 lots and open interest of 43,541 lots. The SHFE lead 2608 contract recorded a trading volume of 31,280 lots and open interest of 69,530 lots. The most-traded SHFE lead contract officially rolled over to the 2608 contract. Currently, primary and secondary lead smelters in China are entering a concentrated maintenance period, creating strong market expectations of a contraction in lead raw material supply, which provides upward support to the futures market. After the Dragon Boat Festival holiday, downstream battery factories have gradually resumed production, generating short-term restocking demand driven by rigid needs. However, at the mid-year period, large downstream battery enterprises are entering the semi-annual financial closing and inventory check phase, which will temporarily slow down their concentrated procurement of lead ingots. The bullish impetus from rigid demand is relatively limited. The weak supply-demand situation makes it difficult to persistently boost lead prices upward. Lead prices are expected to remain in the doldrums in the short term. Data source statement: All data, except publicly available information, are processed by SMM based on public information, market communications, and SMM's internal database models. They are for reference only and do not constitute investment advice.