SHANGHAI, Mar. 27 (SMM) – On Monday, SHFE 1206 lead contract became the most active one with prices opening at RMB 15,645/mt and fluctuating up to RMB 15,680/mt. However, prices met resistance at the 5-day moving average and rolled back earlier gains in the afternoon due to the falling domestic stock markets and LME lead prices. SHFE lead prices finally closed at RMB 15,570/mt, down RMB 30/mt. Trading volumes decreased by 408 lots to 302 lots and positions were up 150 lots to 1,942 lots.
Domestic spot prices rose by RMB 50/mt compared with last Friday. Well-known brands such as Chihong Zn & Ge and Chengyaun were quoted at RMB 15,730-15,750/mt, with premiums over the most active SHFE lead price maintaining at RMB 100/mt. Quotations for other brands including Dongling were at RMB 15,700/mt, and Shenqian was quoted around RMB 15,680/mt. In the afternoon, lead market remained quiet and quotations were rarely reported. With declines in lead prices arrested, buying interest downstream turned lower, leaving limited transactions.
Regarding to the market trends this week, 73% market players believe domestic lead prices should continue to fluctuate. Currently, no further risk events offering clear directions will likely be reported, and the US dollar index is still hovering around 79.5. In domestic spot markets, downstream demand remained soft, leaving light trading. Wait-and-see sentiment should dominate the market given the uncertain market outlook. As such, lead prices are expected to be between RMB 15,650-15,850/mt.
The rest 27% market players were relatively pessimistic. On one hand, the PMI drop in both euro zone and China released last week reflected the weakening demand in both areas, depressing market confidence. On the other, with the completion of inspections at smelters in Guangxi, such as Hechi Nanfang Nonferrous Metals Smelting, some smelters were permitted to resume production. This may intensify the supply surplus against the soft demand. In addition, smelters will be more willing to sell goods in exchange of cash flows during this last week of the month. Thus, these market players expect lead prices will be between RMB 15,500-15,700/mt this week.