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SMM Daily Review - 2011/10/31 Lead Market
Nov 1,2011 09:32CST
price review forecast
87% of market players believe domestic spot lead prices should fluctuate between RMB 15,300-15,500/mt.

SHANGHAI, Nov. 1 (SMM) -- SHFE lead prices fell after a high open on Monday. SHFE lead prices tried to surge to RMB 15,500/mt, but the plummeting LME lead prices caused SHFE lead prices to move below the daily moving average, with SHFE prices later directly dipping to RMB 15,300/mt during the last several minutes before the midday closing. Pessimism still dominated the market and SHFE lead prices even hit as low as RMB 15,185/mt in the afternoon session. Later, brisk buying at lower prices helped SHFE lead prices reverse some losses at the end of trading, with prices finally closing at RMB 15,345/mt, down RMB 120/mt. Trading volumes decreased by 88 lots to 760 lots, while positions increased by 18 lots to 1,986 lots.

In spot markets, quotations for domestic well-known branded lead like Chihong Zn & Ge and Nanfang were between RMB 15,450-15,480/mt in the morning session following SHFE lead price trends. As SHFE lead prices dipped, spot lead prices fell to RMB 15,400/mt in response after 10:30 am. SHFE lead prices fell further in the afternoon, dragging down domestic spot lead prices to between 15,350-15,400/mt. Downstream consumers were cautious toward purchases given pessimism toward future lead prices. Sparse deals were made in the morning, but tight cash flows at the month’s end and the wait-and-see sentiment resulted in almost no transactions in the afternoon.

With regard to lead price trends, 87% of market players believe domestic spot prices should fluctuate between RMB 15,300-15,500/mt. The EU summit stimulated risk appetite, causing LME lead prices to surge by 8.8% during the weekend, hitting a record high USD 2,095.8/mt since late September. It will take time for the market to absorb the increases, while LME lead prices met resistance at USD 2,100/mt level, and will not rise further until more positive news is released. On the other hand, the meeting of G20 will take place this week, while US non-farm employment data will also be released, so investors turn cautious as both will affect the market. In domestic spot markets, although the seasonal high demand period for electric bicycles has passed, other enterprises using lead batteries are building stocks for winter production. Orders at scale efficient enterprises survived the environmental protection inspections are high, with inventories continuing to fall by 5,000 mt last week, and which will support lead prices.

The remaining 13% are pessimistic, believing spot lead prices should fall to RMB 15,000/mt. The EU summit resulted in an agreement on the solution of European debt crisis, but the long-standing European debt crisis will take a long time to thoroughly solve. Lead prices previously remained below RMB 15,000/mt, now that lead prices rose, smelters increased goods supply. But pessimism is lingering due to ongoing European debt crisis, and since the seasonal high demand period for electric bicycles has passed, market players turned cautious, causing demand to weaken. 


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