Lead prices received support this week as inventory destocking at Chinese smelters progressed, with Shanghai Futures Exchange (SHFE) lead expected to consolidate at elevated levels. However, market analysts warn that a reopening of the lead ingot import window threatens to offset domestic supply tightening, potentially limiting further upside in the near term. On the London Metal Exchange (LME), lead prices faced headwinds as inventory ended a four-week downtrend mid-week, with single-day growth of nearly 10,000 tonnes.
More concerning for bulls, the LME lead Cash-3M contango widened further to minus $48.87 per tonne, hitting a nearly five-month low. This indicates that spot market demand outside China remains subdued. According to Shanghai Metals Market (SMM), macro uncertainties surrounding the Middle East and elevated shipping costs are constraining global trade flows, leaving fundamentals without clear price support in the near term.
LME lead is forecast to trade between $1,865 and $1,915 per tonne next week, maintaining a box consolidation pattern. On the SHFE, maintenance activities at delivery brand enterprises combined with cargo pick-up by downstream customers are driving lead ingot destocking, providing underlying support to prices. SHFE lead is expected to continue consolidating at higher levels.
However, the critical concern for the market is the reopening of the lead ingot import window. Spot cargo import lead quotations have begun rising, offsetting the supply reduction caused by maintenance at domestic smelters. SMM analysis suggests that further opening of the import window and increased import supply could pressure domestic lead prices, creating a risk of pullback after recent price gains.
SHFE lead trading range for the following week is forecast between 15,800 and 16,200 yuan per tonne, with spot lead prices estimated at 15,650 to 15,950 yuan per tonne. On demand fundamentals, production enthusiasm among downstream enterprises has relatively improved as the traditional peak season approaches, supporting steady to modestly growing lead consumption expectations. Nevertheless, rapid lead price appreciation is expected to dampen downstream purchasing enthusiasm.
Additionally, the inflow of imported lead and resumption of production at secondary lead enterprises will provide downstream customers with more procurement alternatives, potentially pressuring primary lead spot premiums. While maintenance at delivery brand enterprises supports short-term spot premium trading, SMM cautions that increased supply from alternative sources may offset supply tightening effects, making it difficult for spot premiums to sustain current levels over the longer term. US macroeconomic data scheduled for next week include the July core PCE price index year-on-year, Q2 real GDP annualized quarterly rate revision, and preliminary 2026 non-farm employment base change figures.
Interest rate market data indicates investors currently assign approximately 64% probability to the US Federal Reserve maintaining rates unchanged in September, with around 36% probability of a rate hike. Although a September Fed rate increase remains possible, market rate hike expectations have cooled relative to earlier periods, somewhat reducing the interest rate advantage for the US dollar. Source: Shanghai Metals Market (SMM) via news.metal.com
Source: news.metal.com