17% China Lead Smelters Optimistic over Lead Prices This Week, SMM Surveys

SHANGHAI, Aug. 23 (SMM) – SMM survey of 30 Chinese lead smelters reveals that 17% of them see LME lead to rise above the 5-day moving average and challenge USD 1,900/mt this week and SHFE 1610 lead to stay firm and break through RMB 14,000/mt.

US last week’s crude oil inventories reported by API and EIA were lower than forecast, which sent crude oil up to near USD 50/bbl. Lead supply remains tight at present and cargo holders hold offers firm, which allows spot goods offered at high premiums. This will also lend support to SHFE lead.

Approximately 23% market players in the survey predict that LME lead should drop below the 10-day moving average and give up all earlier gains this week and SHFE 1610 lead will drop below the 40-day moving average and test support at RMB 13,500/mt. Operating rates at small secondary lead smelters are expected to rise with easing of environmental protection inspections. Primary lead smelters in Henan, Yunnan and Jiangxi already restarted operation, which will grow market supply. Battery producers trend to cut purchase with motive battery sectors at the tail of peak season, which will weigh on lead price.   

The rest 60% market players surveyed by SMM expect LME lead to stabilize at around USD 1,800/mt this week and SHFE 1610 lead will stabilize around RMB 14,000/mt. Technical side is positive for LME lead. SHFE 1610 lead is expected to fluctuate between RMB 13,800-14,000/mt for the short term with mixed fundamentals.