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SMM Daily Review - 2011/12/26 Lead Market
Dec 27,2011 09:27CST
smm insight
Source:SMM
80% of market participants believe SHFE lead prices should fluctuate between RMB 15,100-15,400/mt as the market will remain cautious in the last week of 2011.

SHANGHAI, Dec. 27 (SMM) – On Monday, European and US markets were closed for the Christmas holiday. The most active SHFE lead contract prices fell after opening at RMB 15,305/mt, and moved between RMB 15,150-15,200/mt in the morning session. In the afternoon, prices slumped further to RMB 15,100-15,150/mt, and finally closed at RMB 15,095/mt, down RMB 245/mt, or 1.6%. Trading volumes decreased by 62 lots to 398 lots, and positions increased by 18 lots to 1,422 lots.

Domestic spot markets were quiet in general with limited deals done. Both traders and downstream buyers stood on the sidelines. Quotations for well-known brands such as Yuguang, Chihong Zn & Ge were between RMB 15,260-15,270/mt, with premiums against the most active SHFE lead contract prices of RMB 100/mt. Quotations of other brands such as Hanjiang were around RMB 15,240/mt. In the afternoon, SHFE lead prices fell, and in spot markets, quotations for brands including Yuguang dropped to RMB 15,200/mt.

With regard to lead price trends, 80% of market participants believe SHFE lead prices should fluctuate between RMB 15,100-15,400/mt as the market will remain cautious in the last week of 2011. Besides, SHFE lead prices will move at low levels as the LME market was closed during the Christmas holiday. In spot markets, smelters are still unwilling to sell goods with eased financial pressures, while downstream demand is also low, keeping transactions muted.

The remaining 20% are optimistic, believing the market will be boosted by positive US economic data. Risk aversion sentiment eased as US durable goods orders and new home sales were both better than forecast in November. Downstream producers will replenish stocks ahead of the New Year’s holiday to secure production, giving support to lead prices.
 

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