SHANGHAI, Sept. 6 (SMM) -- SHFE 1110 lead contract prices briefly surged to RMB 16,720/mt after opening lower at RMB 16,560/mt on Monday, with prices facing strong pressure from the 5-day and 10-day moving averages. Later, SHFE 1110 lead contract prices fluctuated lower following stock market trends, with prices mainly moving between RMB 16,530-16,560/mt in the afternoon session and finally closing at RMB 16,555/mt, down RMB 80/mt. Trading volumes fell slightly by 74 lots to 698 lots, while positions decreased by 100 lots to 3,800 lots.
As SHFE lead prices fell back after opening higher, initial quotations for domestic well-known branded lead like Chihong Zn&Ge and Nanfang were RMB 16,350/mt, with discounts of negative RMB 350/mt against SHFE 1110 lead contract prices, but later quotations fell to RMB 16,300/mt following SHFE lead prices, with spot discounts unchanged. In the afternoon business, quotations for well-known branded lead slipped again to RMB 16,200/mt, while almost no quotations for other brands were heard in the market, keeping trading sentiment quiet.
With regard to lead price trends this week, 26.7% of insiders are pessimistic. The growth in the number of US non-farm employment for August was much lower than the expected 75,000, extending concerns over stagnation in US economy. The PMI in the Euro zone was also lower than expected, and China’s central bank included commercial banks’ margin deposits in required reserves starting this week. In this scenario, lead prices should fall to RMB 16,100/mt.
20% market players are bullish on lead prices. The disappointing US employment data released last Friday helped improve the possibility of QE3, and they expected Obama will announce some stimulus policies this week. Domestic smelters reduced goods supply on optimistic speculations, while power restrictions are still in place, with goods supply insufficient in Henan due to the after effects from environmental protection inspections. As a result, lead prices will rise to RMB 16,500/mt.
The remaining 53.3% are neutral toward lead price trends, believing prices will fluctuate around RMB 16,300/mt given the poor US employment data and domestic smelters’ holding goods.