SMM Daily Review - 2012/1/9 Lead Market

SHANGHAI, Jan. 10 (SMM) – SHFE lead prices rose to RMB 15,240/mt briefly after opening at RMB 15,110/mt on Monday. However, prices then moved down due to resistance at the 10-day moving average and the lack of upward momentum. After 10: 00 in the morning, SHFE lead prices plunged to RMB 15,100/mt with SHFE copper prices, but then rallied slightly influenced by the rising domestic stocks and moved between RMB 15,130-15,180/mt. SHFE lead prices finally closed at RMB 15,175/mt, down RMB 100/mt . Trading volumes increased by 58 lots to 458 lots, and positions decreased by 32 lots to 1,068 lots.

In domestic spot markets, traded prices for well-known brands such as Nanfang, Chihong Zn & Ge, and Shuikoushan were between RMB 15,210-15,230/mt. Other brands including Tianma were traded at RMB 15,150-15,180/mt. Despite the upcoming Chinese New Year holiday, markets were cautious before the release of China’s December CPI data. Buyers mainly purchased on as-needed basis, leaving transactions modest.

With regard to spot lead price trends this week, market players are mixed. 67% of them are neutral. Despite the number of US non-farm employment rose remarkably in December, concerns over European debt crisis still exist in the long run. Yields of Italian 10-year treasury bills rebounded to 7%, and the unemployment rate in euro zone hit a record high, while economic consumption index remained weak, triggering fears among inventors. Market players expect lead prices will find support as downstream buyers increase purchases ahead of the Chinese New Year holiday. Spot prices are expected between RMB 15,150-15,300/mt.

The remaining 33% are pessimistic, believing LME lead prices will not rise as European debt crisis still dominate the market, despite positive US economic data. Downstream buying interest will be affected due to low demand for electric bicycles. As such, lead prices should move between RMB 15,000-15,250/mt this week.