Next week, macro data releases will include China’s May CPI annual rate, the US May unadjusted CPI annual rate, and the preliminary US June one-year inflation expectations, all of which are about to be released. Additionally, US-Iran peace talks have seen repeated setbacks, and the US is planning to impose additional tariffs on over 60 global economies under Section 301 of the Trade Act of 1974, leaving the macro environment clouded by numerous uncertainties. Furthermore, China’s head of state will pay a state visit to North Korea from June 8 to 9. On the LME lead front, following two consecutive weeks of heavy deliveries into warehouses, LME lead inventory hit a 13-year high. Meanwhile, a supply gap for high-grade lead ingots persists in Southeast Asia. Even though environmental protection inspections on secondary lead have concluded in the Vietnam market, spot lead continues to trade at widespread, high premiums, causing the LME lead ingot inventory buildup to reverse and shift into a decline. Overseas macro uncertainties abound, pressuring the base metals complex lower. Looking ahead, attention should be paid to the strong supportive factor of supply gaps for lead ore and lead ingots. LME lead is expected to trade within $1,990-2,050/mt next week. On the SHFE lead side, a supply-demand mismatch for lead ingots in China and inventory buildup risks are weighing on lead prices. Additionally, with futures delivery approaching, invisible inventory will be converted to visible inventory. During the lead price decline, secondary lead losses have widened, and supply of lead ore and scrap batteries has been tight, leaving limited downside room for lead prices. The most-traded SHFE lead contract is expected to trade within 16,200-16,650 yuan/mt next week. Spot price forecast: 16,200-16,500 yuan/mt. On the supply side, the post-maintenance recovery of primary and secondary lead has paused for now. Furthermore, with secondary lead losses widening, secondary refined lead has formed an inversion over primary lead. Coupled with potential delivery brand shipments to delivery warehouses, circulating supply is expected to tighten relatively, and spot discounts are expected to narrow further. On the consumption side, downstream enterprises are merely producing based on sales, and after the lead price drop, they have not engaged in concentrated procurement as witnessed during the mid-to-late May decline. They are expected to maintain just-in-time procurement.

In the spot market this week (6.1-6.5), SMM #1 lead average price initially stabilized and edged up before pulling back successively within the week. Spot premiums fluctuated in line with futures movements. Downstream users maintained just-in-time procurement throughout the week, with low willingness to purchase at high prices, leading to divergent spot order transactions. Regionally, Henan smelters posted discounts of 25 yuan/mt to premiums of 25 yuan/mt at the start of the week, while traders offered discounts of 180-150 yuan/mt against SHFE lead 2607. By Thursday and Friday, smelters suspended spot order quotations to fulfill long-term contracts, and traders narrowed their discounts to 130-110 yuan/mt, resulting in sluggish trading. In Hunan, ex-factory prices shifted from premiums of 0-30 yuan/mt to parity, then rebounded to premiums of 0-20 yuan/mt by the week's end. In Guangdong, suppliers initially offered discounts of 150 yuan/mt for self pick-up. Overall, as lead prices rose, smelters held back from selling while downstream users purchased sparingly. After the futures market dropped sharply, some rushed to offload cargoes at low prices while others held prices firm. Downstream users sought bargains at lower levels but remained cautious in procurement. Spot transactions were moderate early in the week, gradually weakened in the middle, and overall trading was on the soft side.

SMM June 5 news: Lead prices pulled back sharply, suppliers showed poor willingness to sell, and downstream wait-and-see sentiment was strong. This week, secondary refined lead transactions were subdued overall. Tight supply of scrap battery raw materials pushed up production costs, further deepening industry losses. As of June 5, large secondary lead enterprises lost 517 yuan/mt, while small and medium-sized firms lost 725 yuan/mt, with losses widening by 158 yuan/mt from June 1. The bargaining disadvantage of small and medium-sized enterprises led to wider losses. Looking ahead, production resumptions at secondary lead smelters in east China, northwest China, and other regions will boost rigid demand for scrap batteries, making raw material purchase prices more likely to rise than fall, leaving little room for cost-side pullback. Meanwhile, increased refined lead supply from resumptions will put product quotes under pressure. Under the combined influence of multiple factors, the loss-making pattern in the secondary lead industry is hard to change, and small and medium-sized producers remain mired in deep losses.

SMM June 5 News: As of June 4, finished product inventories of secondary refined lead stood at 23,000 mt, up 1,300 mt WoW from May 28. This week, production resumptions at Anhui smelters released more cargo into the market, but downstream purchases were weak, leading to inventory buildup. Meanwhile, previously locked-in imported refined lead gradually arrived at ports and entered the market, diverting end-use demand. Next week, Anhui enterprises will continue to ramp up production. As raw material costs provide support for offers, secondary refined lead spot cargo will lack cost competitiveness, and inventories will continue their buildup trend.

[Secondary Lead Market Update] Downstream battery producers' purchase willingness was weak. Today, some lead-acid battery groups proposed a secondary refined lead price down by 50 yuan/mt from yesterday, while a few enterprises with high inventories of raw material lead ingots proposed a price down by 25 yuan/mt.

[SMM Lead Morning Meeting Minutes: Rising Risk of Lead Ingot Inventory Buildup in China, Lead Prices May Remain in the Doldrums] US Fed official: the current choice is between maintaining patience or raising interest rates, inflation is the top economic risk, and AI has not yet had an impact. Recently, primary lead and secondary lead enterprises in Henan, Anhui, and other regions have resumed production collectively, increasing lead ingot supply...

[SMM Lead Morning Meeting Minutes: Macro Disruptions Combined with Weak Fundamentals Push Lead Prices Lower] Recently, the ex-China macro landscape has been complex and volatile, with expectations for shipping recovery timelines pushed back, and non-ferrous metals across the board falling in negative territory. Meanwhile, LME lead inventory stood at its highest level since 2013...

[SMM Lead Morning Meeting Minutes: Divergent Fundamentals in and outside China, LME Outperforms SHFE] Recently, news on the progress of US-Iran negotiations has been mixed, and macro uncertainties persist. Meanwhile, the fundamental markets in and outside China also show significant divergence...

[SMM Lead Morning Meeting Minutes: Supply Recovery VS Tight Raw Materials, Lead Prices May Continue to Consolidate] The U.S.-Iran ceasefire and peace talks continued to advance, but considerable uncertainties remained, and risk-averse sentiment was strong in the market. Production at China's primary lead and secondary lead smelters was gradually recovering...

[SMM Lead Morning Meeting Minutes: Divergent Fundamentals in and outside China, Lead Prices Expected to Lack Upward Momentum] Over the weekend, U.S.-Iran negotiations took another turn, with foreign media reporting that Trump significantly revised the memorandum of understanding, proposing tougher terms in an attempt to pressure Iran into accelerating negotiations. The macro landscape remains complex and volatile, while lead fundamentals diverge. In markets outside China, LME lead had previously been in a backwardation structure...