Benchmark lead on the LME was down 1.2% at $2,023.50 a tonne 1005 GMT.
The metal used in batteries had rallied nearly 20% from early May to a high of $2,117 last week as smelter outages in Australia and China curtailed production.
But lacklustre projected demand from China, the biggest consumer of metals, was undermining prices, said Macquarie analyst Vivienne Lloyd.
Lead would likely fall to around $1,900 by year-end despite a small deficit in the roughly 12 million tonne a year market, she said, adding that other base metals would also slip unless China was able to step up stimulus spending.
LEAD STOCKS: Lead inventories in LME-registered warehouses rose 11,850 tonnes to 67,325 tonnes, but remain near their lowest in a decade. <MPBSTX-TOTAL>
LEAD SPREAD: In a signal that nearby supply is not too tight, cash lead moved back into discount against three-month metal on the LME. <CMPB0-3>
FACTORIES: Underlining the weak demand outlook, a Reuters poll showed factory activity in China is expected to have contracted for the third month in a row in July.
The China data will add to a slew of weak manufacturing readings in Europe, the United States and Japan, where output tumbled the most in nearly 1-1/2-years in June, data showed on Tuesday.
GERMANY: In Germany, consumer morale worsened for the third month in a row, a survey showed.
TRADE WAR: Helping cause the slowdown in economic activity is a U.S.-China trade war which shows no sign of ending as negotiators shift to Shanghai this week for their first in-person talks since a G20 truce last month.
FED: Investors were looking to the U.S. Federal Reserve, which is expected to lower borrowing costs this week for the first time in more than a decade.
Lower interest rates should support commodities prices by encouraging economic growth and weakening the dollar, which has strengthened sharply in recent weeks, making metals more expensive for buyers with other currencies.
JAPAN: The Bank of Japan held off on expanding stimulus on Tuesday but committed to doing so "without hesitation" if a global slowdown jeopardises the country's economic recovery.
OTHER METALS: LME copper was down 0.6% at $5,980 a tonne, aluminium was up 0.2% at $1,815, zinc rose 0.3% to $2,477, nickel slipped 0.6% to $14,270 and tin was down 0.1% at $17,590.