SHAGNHAI, Oct. 10 (SMM) -- In the SHFE lead market, prices of SHFE 1111 lead contracts slid below RMB 14,000/mt in early week trading due to plunging LME lead prices, but SHFE lead prices later rose above RMB 14,600/mt as LME lead prices rebounded. On Thursday, LME lead prices opened significantly lower due to sluggish LME lead prices, down to RMB 13,590/mt, the lowest level since its launch. A weak US dollar, however, helped SHFE lead prices return above RMB 14,000/mt. The SHFE market will not re-open until October 10th due to the Chinese National Day holiday. SHFE lead prices will likely rally up to RMB 15,000/mt after the holiday if LME lead prices make significant gains during the holiday.
In the spot market, traded prices tracked movements in the SHFE lead market, initially rising to RMB 14,350-14,400/mt, but later falling to RMB 14,100/mt with discounts over SHFE 1111 lead contract between RMB 50-0/mt. In order to maintain stable production during the holiday, downstream producers began to show interest in building stocks as prices stabilized. However, supply of goods from arbitrage trading fell on a weekly basis. Smelters were also reluctant to move goods, except those under heavy cash flow pressure. In this context, market supply was limited and transaction activity was strong. In domestic spot markets, smelters will likely move goods for cash generation after the holiday if lead prices remain sluggish, allowing downstream producers to increase purchases at lower prices. With spot discounts over SHFE 1111 lead contract at negative RMB 100-200/mt, transactions should be made between RMB 14,400-14,800/mt.