The Chinese lead market is set to enter a consolidation phase following the National Day holiday break, according to the latest Shanghai Metals Market (SMM) weekly forecast. The SHFE exchange will remain closed from October 1 to 7, resuming operations on Thursday, October 8, with only two trading days available next week due to the holiday period. On the macroeconomic front, key US data releases will include the preliminary University of Michigan consumer sentiment index for October and preliminary one-year inflation expectations for October.
Recent statements from US Federal Reserve officials have reinforced a tightening stance, with market pricing for an October rate hike declining from approximately 70% to around 50%. Investors should monitor the Fed's monetary policy meeting minutes following the holiday break. For LME lead, overseas lead inventories have continued their downward trajectory.
The LME Cash-3M contango has widened to minus $32.46 per metric ton, while pressure from a stronger US dollar index has pushed the LME lead price center lower. The import window for Chinese lead ingots has reopened, creating potential opportunities for overseas lead ingot imports to redirect toward China. SMM forecasts that LME lead will trade within a range of $1,875 to $1,940 per metric ton during the China holiday period.
For SHFE lead, the post-holiday market is expected to be characterized by limited downstream purchasing activity as enterprises focus on inventory digestion. Smelter inventories and social inventories currently stand at relatively low levels, which constrains the potential for post-holiday lead ingot inventory buildup. Primary lead output is anticipated to grow following the holiday, with imported lead gradually arriving in the market.
SMM projects the most-traded SHFE lead contract will consolidate in a range of 16,000 to 16,450 yuan per metric ton following the holiday. Spot lead prices are forecast to trade between 16,000 and 16,300 yuan per metric ton. Lead-acid battery enterprises are expected to resume normal production after the holiday, though initial procurement demand will likely remain limited with enterprises prioritizing inventory digestion.
Spot circulating supply will increase compared with pre-holiday levels, making premium transactions difficult to sustain. Data Source: Shanghai Metals Market (SMM), based on publicly available information and SMM's internal database model.
Source: news.metal.com