SMM Daily Review - 2012/3/19 Lead Market

SHANGHAI, Mar. 20 (SMM) – On Monday, SHFE lead prices opened lower at RMB 15,895/mt and hit a low of RMB 15,835/mt due to falling domestic stock markets. In the afternoon, prices moved between RMB 15,840-15,860/mt with resistance still existing and finally closed at RMB 15,865/mt, down RMB 150/mt. Traded volumes increased by 112 lots to 328 lots and positions were up 54 lots to 1,552 lots.

In domestic spot markets, quotations for brands such as Chihong Zn & Ge were at RMB 15,900/mt. Other brands such as Hanjiang, Dongling and Yubei were quoted between RMB 15,810-15,840/mt. Spot prices were relatively firm, resulting in plenty of arbitrage opportunities. In the afternoon, spot prices in Shanghai remained unchanged and limited transactions were made due to high prices.

With respect to lead price trends this week, 60% industry insiders believe domestic spot prices should remain stable and fluctuate between RMB 15,750-15,900/mt. Although the European debt crisis had eased somewhat, the issue was not solved fundamentally. Meanwhile, the slow recovery of US economy was not able to give strong support to current lead prices, leaving strong wait-and-see sentiment in the market. On the other hand, with traditional peak demand season for lead-acid batteries coming to an end, weak demand and surplus in lead supply will continue, so downstream enterprises are not eager to purchase with a lack of orders. As such, increase in lead prices will be limited.

However, the remaining 40% were pessimistic. Downstream consumption will turn soft in mid-March with the approach of low demand season, combined with environmental protection inspections of lead-acid battery producers initiated in Henan, Shandong, Anhui, Hubei and Jiangsu, lead demand will further decline. Besides, the most active SHFE lead contract prices were under strong resistance. Thus, lead prices are expected to drop slightly to move between RMB 15,550-15,750/mt this week.