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SMM Daily Review - 2012/3/12 Lead Market
Mar 13,2012 08:54CST
smm insight
With regard to the lead price trends this week, 73% of industry insiders believe spot lead prices will not show significant change.

SHANGHAI, Mar. 13 (SMM) – On Monday, SHFE 1205 lead contract became the most active one. Although LME lead prices rose last Friday, SHFE lead prices did not increase significantly, and moved between RMB 15,930-15,970/mt after opening at RMB 15,970/mt. In the afternoon, SHFE lead prices moved down to hit a low of RMB 15,880/mt due to the falling domestic stocks and finally closed at RMB 15,940/mt, down RMB 80/mt. Traded volumes increased by 156 lots to 396 lots and positions were up 162 lots to 1,386 lots.

Spot lead price in China’s domestic markets remained unchanged from last week. Quotations were fewer as SHFE lead prices were not steady on Monday and market players were cautious. Brands including Yubei and Shuangyan were quoted between RMB 15,800-15,850/mt, and quotations for Shenqian were at RMB 15,750/mt. Transactions remained modest. In the afternoon, futures prices fell slightly and quotations were sparse in spot markets.

With regard to the lead price trends this week, 73% of industry insiders believe spot lead prices will not show significant change and should remain between RMB 15,600-15,900/mt. Despite the completion of Greek debt exchange, Greece will still be at high risk of defaulting according to credit rating agency Moody’s as private creditors may suffer great losses in the debt exchange. In addition, investors will remain cautious before the much concerned US Federal Reserve meeting on interest rates scheduled for this Wednesday. In domestic spot markets, cargo holders will be more willing to move goods, but downstream buyers will purchase on an as-needed basis with the approach of offseason.

The rest 27% are relatively optimistic as the completion of the Greek debt exchange secured the EU’s second bailout loan to Greece, combined with the positive US nonfarm payrolls released last Friday, risk aversion in the market was eased. Meanwhile, LME lead inventories have been falling since early March. In China’s domestic spot markets, lead concentrate supply was in shortage since the unfavorable Shanghai/LME lead price ratio left few lead concentrate imports and crude lead was hard to find in domestic markets. Therefore, operating rates at lead smelters remained low, and refined lead supply will continue to decline as a result. Besides, since some smelters had to limit sales due to lower output caused by repairs and environmental protection inspections, lead supply will likely fall significantly in the near term, helping support lead prices to hold at the RMB 16,000/mt mark.

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