SHANGHAI, Apr. 11 (SMM) – SMM survey of 30 market players reveals that 70% of them are bearish towards lead prices this week citing poor downstream demand. They expect LME lead to fall to USD 1,680/mt and SHFE 1605 lead to test support at RMB 13,000/mt.
See SMM Price Forecast, Please Click:LME and SHFE Lead to See Weak Trading Next Week, SMM says
Term purchase can basically meet downstream motive and ignition battery producers’ demand with limited orders in off-season. This cut demand for spot goods in market. Transactions in secondary refined lead market also start weakening recently, which further proves falling demand from downstream sectors.
On the supply side, lead supply will be on the rise this week despite maintenance at Jinli Gold & Lead Group. Goods from three producers, namely Lingbao Zhicheng Lead, Hechi Nanfang Non-ferrous Metals Group and Hechi Xinhua Smelting, should flow into market this week. Operating restart in Guangxi will likely grow supply in Guangdong, weighing on prices there. Henan-based smelters will rush to sell on inventory and cash pressure and this allows local spot discounts to expand to RMB 150-250/mt from RMB 100-150/mt against SMM #1 lead average price. Even for this, downstream purchase may still remain weak.
30% respondents see lead prices to move at current levels this week with LME lead struggling around USD 1,710/mt and spot prices at RMB 13,200-13,350/mt. US Fed officials show dovish attitudes and US dollar index should thus trade at lows. Besides, crude oil prices bounce back, giving support to lead prices. And any sharp declines in lead prices are hence unlikely. Economic figures from China turn from negative to neutral. March CPI grew for five months in a row and declines in PPI shrank, boosting market confidence.
Technically, LME lead registers losses for four straight weeks with falling positions. Position closing by longs gradually comes to an end and declines in LME lead slow. Positive macroeconomic news may drive LME lead prices up. But LME lead meets strong resistance at the 5 and 10-day moving averages. As such, lead prices should head for stability. Moreover, scrap battery supply tightens in market and lead smelters have to raise their purchase prices. But limited support is expected from this.