Next week, key macroeconomic data will include the US June core PCE price index y/y, the US July University of Michigan consumer sentiment index final reading, and China's July official manufacturing PMI, with the major event being the US Fed FOMC interest rate decision. With only a few days until the Fed meeting, the market remains deeply divided over whether the Fed will hike rates this month, a situation rarely seen in recent years. The market widely expects a high probability that the Fed will keep rates unchanged, though attention still needs to be paid to the policy signals from the meeting and the post-meeting statement. Meanwhile, the US reimposition of reciprocal tariffs and the escalating US-Iran conflict, together with rising energy costs such as crude oil, have heightened market concerns over the global economic outlook. LME lead side, after a surge in LME lead inventory outside China the previous week, LME lead cancelled warrants increased significantly this week, up nearly 30,000 mt WoW. Geopolitical tensions outside China, rising crude oil prices, and shipping constraints have pushed up lead prices from the cost side. At the same time, expectations of lead consumption growth in the Southeast Asian market persist, which will provide some support for the lead market, but high lead ingot inventory pressure will still limit the upside room for lead prices. Next week, LME lead is expected to trade at $1,875-1,935/mt. SHFE lead side, as August approaches, the market has expectations for the traditional peak season for lead-acid batteries, but actual consumption so far has been disappointing. While smelter production has been steady to slightly higher, lead ingot inventory faces further accumulation pressure. Currently, lead ingot inventory is mainly concentrated at smelter warehouses. Going forward, attention should be paid to the potential shift from invisible to visible inventory, which could continue to weigh on lead prices. Next week, the most-traded SHFE lead contract is expected to trade at 15,550-15,950 yuan/mt. Spot lead price forecast: 15,500-15,750 yuan/mt. Consumption side, demand in the lead-acid battery market remains weak. Downstream enterprises remain cautious in procurement, with just-in-time procurement still dominant. Supply side, primary and secondary lead smelters are seeing mixed production adjustments. Spot market supply is ample, and spot cargoes are generally trading at a discount. With new monthly long-term contracts set to begin execution next week, the spot market discount structure may be hard to improve significantly.

Next week, key macroeconomic data will include US June housing starts, building permits, industrial production, and the University of Michigan consumer sentiment index, which will influence market expectations for the Fed's rate path. Meanwhile, the ongoing Middle East geopolitical conflict continues to escalate, with shipping volume through the Strait of Hormuz falling to about one-tenth of pre-war levels. Geopolitical risks have pushed oil prices higher, raising supply-chain cost expectations. LME lead, within the week LME lead inventory surged by 160,000 mt, sparking risk-off sentiment and driving LME lead to its lowest level in over a year. As lead prices fell, the LME lead Cash-3M spread remained in a deep contango, with the latest quote at -$43.83/mt. Moreover, heightened uncertainty over the Middle East conflict, along with rising energy and shipping costs, may become another factor affecting lead prices. Once the inventory buildup news is digested by the market, lead prices are expected to get a breather. Next week, LME lead is expected to trade at $1,850-1,905/mt. SHFE lead, visible lead ingot inventories first increased then declined this week due to delivery factors and downstream purchasing. After the bearish news of overseas inventory buildup ran its course, market attention in China shifted to the production dynamics of secondary lead enterprises and downstream purchasing trends. If lead ingot inventories continue to destock, lead prices are expected to return to 16,000 yuan/mt. The most-traded SHFE lead contract is expected to trade at 15,600-16,150 yuan/mt next week. Spot lead price forecast: 15,650-15,950 yuan/mt. Consumption side, the lead-acid battery market remains in the off-season, with downstream enterprises continuing to purchase as needed. However, as lead ingots re-enter the circulation market after delivery, downstream cargo pick-up is expected to increase. Supply side, secondary lead enterprises maintain low operating rates, with limited supply circulating in the market, while primary lead supply is relatively ample. The spot market is expected to continue trading at a discount.

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.