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SMM Daily Review - 2011/12/5 Lead Market
Dec 6,2011 11:26CST
smm insight
With regard to lead price trends, 80% market players believe SHFE lead prices should remain fluctuating between RMB 15,500-15,700/mt.

SHANGHAI, Dec. 6 (SMM) – SHFE lead prices opened at RMB 15,710/mt and fell to RMB 15,630/mt due to dropping domestic stocks on Monday. As investors stayed away from the market due to ongoing European debt issues, LME lead prices moved weakly around the moving average between RMB 15,600-15,650/mt, and finally closed at RMB 15,640/mt, down RMB 55/mt. Trading volumes only increased by 2 lots to 394 lots, and positions decreased by 84 lots to 2,406 lots.

In domestic spot markets, quotations for domestic well-known brands such as Nanfang, Chihong Zn & Ge were between RMB 15,630-15,640/mt, close to SHFE 1201 lead contract prices. Quotations for other brands such as Huoju were RMB 15,600/mt. In the afternoon, SHFE lead prices continued to move weakly, and spot lead prices remained stable. Smelters mainly moved goods for long-term contracts due to optimism. Meanwhile, downstream buyers only purchased as needed due to higher prices, leaving transactions quiet.

With regard to lead price trends, 80% market players believe SHFE lead prices should remain fluctuating between RMB 15,500-15,700/mt, and spot lead prices will be around RMB 15,600/mt, close to last Friday's level. Investors are cautious ahead of the results of interest rates for December by the Reserve Bank of Australia, Bank of Canada, Bank of England and European central bank and the EU summit taking place this Friday. The Shanghai Composite Index remained weak; in domestic spot markets, profit margins at downstream lead battery producers were reduced due to environmental protection inspections, while cash flow problems increases as the year end nears. In addition, demand for electric bicycles is still weak despite the seasonal high demand period, weighing down lead prices.

The remaining 20% insiders are optimistic, believing SHFE lead prices should edge up, meeting resistance at RMB 16,100/mt level. Spot prices should be between RMB 15,700-15,800/mt. After China's central bank announced it would cut deposit reserve ratio and global 6 central banks injected liquidity, the number of US non-farm employment increased 120,000, while the unemployment rate fell to 8.6% in November, the lowest since March 2009, a signal of improving job market in the US. In this context, LME inventories continued to fall. Besides, output from some smelters fell as they had suspended production for maintenance cycle. Investors are moving goods for long-term contracts given easing cash flow, supporting lead prices to some extent.

SHFE lead prices
spot lead prices

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