Lead Prices May Aurge and Pull Back after Fundamental Bullish Factors Pay Off

SHANGHAI, Dec 14 (SMM) - The bullish and bearish expectations will be mixed for this week. This week, US will release last week’s initial jobless claims, the annualised total space floor of newly started houses in November, the annualised total space floor permitted to be built in November, the Markit manufacturing and service industry PMI in December, the US PPI in November, and the retail sales in November. China will release the national power consumption in November, residential sales prices in 70 large and medium-sized cities, total retail sales of consumer goods in November, investment in urban fixed asset in November, and the added value of industrial enterprises above designated size in November. The Fed FOMC will announce the interest rate resolutions this week.

The progress was made in the experiments of the vaccine against the new COVID-19 variant, and the higher electricity prices pushed up the production costs, so LME lead rebounded from a low level and moved to the middle of Bollinger Band. However, the lead stocks across LME-listed warehouses increased more slowly. The prices may congest this week without further bullish news. LME lead is expected to move between $2,220-2,300/mt.

The lead supply was tight in some regions due to environmental protection and maintenance, so the social inventory continued to fall. The fundamentals were bullish to the lead prices, while the discounts of secondary refined lead expanded significantly after the profits recovered, and the lead prices may pull back from a high level. The SHFE 2112 lead contract will be delivered this week. The most traded SHFE lead contract is expected to stand between 15,200-15,550 yuan/mt this week.

The spot prices are expected to move between 15,000-15,350 yuan/mt this week. The primary lead smelters gradually resumed the production, but the supply varied by region. The smelters may quote for the small orders at discounts in order to collect the funds at the end of the year. The secondary lead smelters increased shipments amid rebounding profits, and the discounts of quotations diverged due to the tight supply in some regions. The demand from battery market was modest, and the companies mostly purchased on demand to ensure stable production at the end of the year. SMM will monitor the impact of the companies’ collection of funds on the purchases of lead ingots.