Last week, SHFE lead prices suffered declines over four consecutive days due to falling LME lead prices, with prices moving between RMB 15,300-15,500/mt in the first three days and gaining strong support at 5 and 10-day moving averages. On Thursday, however, SHFE lead prices continued to fall below RMB 15,000/mt mark after opening lower as LME prices slumped, falling as low as RMB 14,600/mt, a daily drop of nearly 5%. SHFE lead prices should move between RMB 14,600-15,300/mt in the coming week.
In China’s domestic spot markets, spot lead prices were stable early last week between RMB 15,350-15,450/mt. Prices were relatively high, so sales of batteries for electric bicycles turned soft. Coupled with negative macro economic condition, transactions were only modest in the spot lead market. However, spot lead prices fell later in the week to RMB 14,800-14,900/mt, moving lower along with plunging SHFE lead prices. Transactions improved due to arbitrage trading and bargain hunting by downstream buyers. Meanwhile, smelters became more reluctant to move goods due to low prices. During the past two months, lead ingot supply was lower due to production cuts and repairs at smelters, while downstream buyers were more active purchasing at prices below RMB 15,000/mt in preparation for the coming peak demand season during winter. In the coming week, traded prices in domestic spot market should be RMB 14,700-15,200/mt, with spot premiums over SHFE three-month lead contract will at RMB 0-30/mt.