SMM Daily Review - 2012/1/16 Lead Market

SHANGHAI, Jan. 17 (SMM) – SHFE lead prices opened lower at RMB 15,350/mt on Monday and dipped briefly to RMB 15,265/mt influenced by LME lead prices, but later stopped falling and moved around the moving averages. In the afternoon, SHFE lead prices rose to touch RMB 15,495/mt along with the rising LME lead prices but lacked upward momentum, with prices finally closed at RMB 15,420/mt. Trading volumes decreased by 96 lots to 368 lots, and positions increased by 148 lots to 2,034 lots.

In domestic spot markets, quotations for well-known brands such as Nanfang, Chihong Zn & Ge were between RMB 15,360-15,370/mt, close to the most active SHFE lead contract prices. Quotations were rarely reported in the market as downstream traders began their holiday. In the afternoon, despite the slight rise in SHFE lead prices, transactions remained rather quiet.

This week is the last trading week ahead of the Chinese New Year holiday. Smelters, traders and downstream producers have suspended production for the holiday. Smelters moved goods modestly, with quotations barely reported, and downstream buying interest is low. European debt crisis will deteriorate, and the market has expected credit rating cut, while US major economic data was positive. As such, 67% market players believe spot lead prices should be between RMB 15,300-15,450/mt.

The remaining 33% are pessimistic, believing lead prices will be mainly affected by macroeconomic news. Concerns over European debt crisis improved as Standard & Poor’s downgraded French credit rating and due to disappointing Italian treasury bill auctions. Downstream buying interest is low as they advanced holiday due to poor sales, leaving transactions quiet. As such, spot lead should be traded between RMB 15,100-15,300/mt.