SHANGHAI, Jun. 24 (SMM) – SHFE 1508 lead surged over 2% just in two trading days after Chinese Dragon Boat Festival. What are major drivers behind this strong growth?
Delivered goods on SHFE began flowing into spot market June 17 with the June-delivery SHFE lead contract expiring. Spot premiums in Guangdong prompted profit-driven traders to buy in futures market and sold in spot markets, SMM learned.
Furthermore, SMM also understood that some investors bought in futures market below 13,000 yuan per tonne as they believe the weak consumption will drag spot premiums down from mid-June's high of 600 yuan per tonne (Shanghai market). This buying support helped August-delivery SHFE lead present a strong rally after the holiday.
“The Shanghai/LME lead price ratio has risen to a record 7.3-7.4 lately, but some players now start selling SHFE lead and buying LME lead, which may limit the upward room in SHFE lead price,” SMM analyst says.
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