SHFE Lead Prices Rose before Falling Last Week, Primary Lead Price Returned above Secondary Refined Lead Price

SHANGHAI, Feb 27 (SMM) – LME three-month lead contract opened at $2,069/mt last week. On Monday, LME lead rose sharply. However, Markit’s flash service PMI in the United States in February released on Tuesday was 50.5, compared with the previous reading of 46.8 and the forecast 47.5. The market expects that the subsequent service inflation in the United States in February may still have strong resilience, and the expected interest rate hike by the Fed is higher. LME lead price inched lower. LME lead continued to fall on Wednesday and Thursday, and the Federal Reserve issued the minutes of its January interest rate meeting on Thursday, which showed the determination to fight inflation. As of 4:00 pm CST on Friday, LME three-month lead stood at $2,058/mt, a weekly decline of 0.53%. SHFE 2303 lead contract price opened at 15,170 yuan/mt last week. Bolstered by LME lead, SHFE lead prices maintained upward trend early last week, but fell on Thursday and closed the week 1.02% higher at 15,325 yuan/mt on Friday.

In the spot market, the SMM price of #1 lead stood at 15,000-15,225 yuan/mt last week. According to SMM survey, after the lead price rebounded at the beginning of the week, the price spread between primary lead and secondary refined lead narrowed. Discounts offered by smelters expanded from the prior week but narrowed again at the week’s end when led prices fell. Spot discounts against the SHFE 2303 lead contract at smelters in Henan expanded to up to 260-250 yuan/mt in the middle of the week, and narrowed to 200 yuan/mt on Friday.

The inventory of smelters in Hunan area remained relatively low, but the premiums slid. Some smelters quoted close to the contract prices or with small discounts. Discounts of smelters in Yunnan expanded to 310-280 yuan/mt in the middle of the week, and narrowed slightly near the weekend. In terms of the trade market, some sellers expanded spot discounts slightly after SHFE lead prices rose. Discounts under warrants against the SHFE 2303 lead contract in Shanghai stood at 20-0 yuan/mt, and those in Jiangsu and Zhejiang stood at 50-0 yuan/mt. But many traders reported sluggish trades amid poor downstream demand. Price volatility kept purchases subdued, muting trading.