SMM Daily Review - 2012/2/20 Lead Market-Shanghai Metals Market

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SMM Daily Review - 2012/2/20 Lead Market

SMM Insight 08:47:18AM Feb 21, 2012 Source:SMM

SHANGHAI, Feb. 21 (SMM) – On Monday, SHFE lead prices moved down after opening at RMB 15,600/mt. LME lead prices gapped higher and moved above the 5-day moving average, but SHFE lead prices did not increase accordingly. The final decision on Greek bailout plan will be made Monday night, and markets remained cautious before any actual result was reported. SHFE lead prices moved narrowly between RMB 15,650-15,700/mt, being more resilient compared with other base metals, and finally closed at RMB 15,685/mt, up RMB 30/mt. Trading volumes decreased by 200 lots to 254 lots and positions were up 10 to 1,976 lots.

In China’s domestic spot markets, quotations for well-known brands such as Chihong Zn & Ge, Chengyuan, Yuguang and Shuikoushan were RMB 15,650-15,700/mt, with premiums of RMB 0-30/mt against the most active SHFE lead contract price. Transactions were rarely seen due to higher prices, and quotations for lead from Gejiu were hardly reported. Other brands were mainly quoted at RMB 15,520/mt. In the afternoon, SHFE lead prices remained stable and spot prices changed little. Trading market improved moderately as lead prices tended to stabilize.

Opinions have been divided on lead price trends this week. 53% of market players are optimistic, believing lead prices will increase but to a limited degree, while spot prices will be above RMB 15,800/mt. Last week, LME lead prices surrendered the gains over the past month and rallied soon after hitting to a low of USD 2,002/mt, with a sign of stabilizing following the continuous fluctuations since September 2011. Besides, according to relevant reports, the Greek bailout plan will most likely be approved on Monday when final decision should be made on the issue. Furthermore, China’s central bank announced to lower banks’ reserve requirement ratio by 0.5 percentage points Saturday night, which is also favorable to the market. On the other hand, the production cuts in Yunnan caused by prolonged drought and the production suspension in Guangxi, as well as eased inventory pressure will reduce lead supply, so as to help support prices.

33% of market players hold that lead prices will remain fluctuations. Although China’s RRR cut will help inject liquidity to the market, the influence will be limited. China’s domestic stocks fell and commodity markets also showed a downtrend after opening higher on Monday, reflecting a lack of driving force from the injection of liquidity. Lead prices will mainly be dominated by the progress on the Greek debt issue. Hence, market may remain cautious before any actual result is reported. In addition, consumption of metals has not showed any improvement, and base metal prices, led by copper prices, are hard to rise with resistance. In this context, lead prices are not likely to rise. Despite low buying interest among downstream enterprises, some traders are still willing to replenish at lower prices. Purchases for branded lead were limited while transactions for lead from Gejiu were rarely seen. Given fewer supplies and weak demand, prices should continue to fluctuate between RMB 15,500-15,800/mt this week.

The remaining 13% are bearish on lead prices, saying investors are losing patience with the lingering Greek debt issue, and the RRR cut is hard to exert great influence on the market in short term. Besides, operating rates at downstream enterprises remain low due to the lack of orders and labor shortages, leaving few purchases for refined lead. Therefore, lead prices will be below RMB 15,500/mt with little chance of rising.

Key Words:  SHFE lead   lead price   price trends 

SMM Daily Review - 2012/2/20 Lead Market

SMM Insight 08:47:18AM Feb 21, 2012 Source:SMM

SHANGHAI, Feb. 21 (SMM) – On Monday, SHFE lead prices moved down after opening at RMB 15,600/mt. LME lead prices gapped higher and moved above the 5-day moving average, but SHFE lead prices did not increase accordingly. The final decision on Greek bailout plan will be made Monday night, and markets remained cautious before any actual result was reported. SHFE lead prices moved narrowly between RMB 15,650-15,700/mt, being more resilient compared with other base metals, and finally closed at RMB 15,685/mt, up RMB 30/mt. Trading volumes decreased by 200 lots to 254 lots and positions were up 10 to 1,976 lots.

In China’s domestic spot markets, quotations for well-known brands such as Chihong Zn & Ge, Chengyuan, Yuguang and Shuikoushan were RMB 15,650-15,700/mt, with premiums of RMB 0-30/mt against the most active SHFE lead contract price. Transactions were rarely seen due to higher prices, and quotations for lead from Gejiu were hardly reported. Other brands were mainly quoted at RMB 15,520/mt. In the afternoon, SHFE lead prices remained stable and spot prices changed little. Trading market improved moderately as lead prices tended to stabilize.

Opinions have been divided on lead price trends this week. 53% of market players are optimistic, believing lead prices will increase but to a limited degree, while spot prices will be above RMB 15,800/mt. Last week, LME lead prices surrendered the gains over the past month and rallied soon after hitting to a low of USD 2,002/mt, with a sign of stabilizing following the continuous fluctuations since September 2011. Besides, according to relevant reports, the Greek bailout plan will most likely be approved on Monday when final decision should be made on the issue. Furthermore, China’s central bank announced to lower banks’ reserve requirement ratio by 0.5 percentage points Saturday night, which is also favorable to the market. On the other hand, the production cuts in Yunnan caused by prolonged drought and the production suspension in Guangxi, as well as eased inventory pressure will reduce lead supply, so as to help support prices.

33% of market players hold that lead prices will remain fluctuations. Although China’s RRR cut will help inject liquidity to the market, the influence will be limited. China’s domestic stocks fell and commodity markets also showed a downtrend after opening higher on Monday, reflecting a lack of driving force from the injection of liquidity. Lead prices will mainly be dominated by the progress on the Greek debt issue. Hence, market may remain cautious before any actual result is reported. In addition, consumption of metals has not showed any improvement, and base metal prices, led by copper prices, are hard to rise with resistance. In this context, lead prices are not likely to rise. Despite low buying interest among downstream enterprises, some traders are still willing to replenish at lower prices. Purchases for branded lead were limited while transactions for lead from Gejiu were rarely seen. Given fewer supplies and weak demand, prices should continue to fluctuate between RMB 15,500-15,800/mt this week.

The remaining 13% are bearish on lead prices, saying investors are losing patience with the lingering Greek debt issue, and the RRR cut is hard to exert great influence on the market in short term. Besides, operating rates at downstream enterprises remain low due to the lack of orders and labor shortages, leaving few purchases for refined lead. Therefore, lead prices will be below RMB 15,500/mt with little chance of rising.

Key Words:  SHFE lead   lead price   price trends