SMM Lead Price Forecast (Feb.6-10)

SHANGHAI, Feb. 6 (SMM) – SHFE lead prices, boosted by higher LME lead prices during the holiday, opened higher at RMB 16,440/mt on the first trading day following the Chinese New Year holiday, a new high since September 2011. However, later in last week, SHFE lead prices were dragged down by declining Chinese stock markets, falling to RMB 15,960/mt. SHFE lead prices are expected to move between RMB 15,800-16,200/mt in the coming week.

In China’s domestic spot markets, lead prices fell to RMB 15,800/mt last week, down from RMB 16,100/mt, and with discounts over the SHFE lead prices growing from RMB 100/mt to as high as RMB 180/mt. Since large smelters have now resumed production and since inventories were relatively high during the holiday, cargo holders were actively moving goods. However, most downstream enterprises will not restart production until after the Lantern Festival on February 6 and those now open were consuming existing stocks, so buying interest was low and transactions quiet. Production at downstream enterprises will return to normal and demand should improve following the Lantern Festival. However, smelters may undertake regular maintenance and use remaining output for long-term contracts, limiting supply and help support prices between RMB 15,700-16,100/mt in the coming week.