SMM Daily Review - 2012/5/7 Lead Market

SHANGHAI, May 8 (SMM) – SHFE lead prices fell to around RMB 15,680/mt soon after gapping lower at RMB 15,700/mt on Monday, and then moved narrowly for the whole day to finally close at RMB 15,710/mt, down RMB 90/mt. Trading volumes were down 104 lots to 108 lots, and positions were up 38 lots to 1,442 lots.

In China’s domestic markets, quotations for Chihong Zn & Ge and Chengyuan were mainly at around RMB 15,650/mt, and Tongguan was quoted at RMB 15,620/mt, with discounts against the most active SHFE lead prices narrowing from RMB 100/mt to RMB 50-70/mt. Shuangyan was quoted at RMB 15,550/mt, and offer for Shenqian was around RMB 15,500/mt. Transactions were modest despite improved selling interest among dealers.

As for price trends this week, 73% industrial insiders believe spot lead prices should remain between RMB 15,600-15,750/mt due to mixed economic data and directionless market. US April nonfarm payrolls was reported lower than expected, but rose by 115,000 from the previous month, so investors should remain cautious and SHFE lead prices may move within a narrow band. In domestic spot market, demand from end consumers was sluggish, leaving fewer purchases. Thus, lead prices will not likely change significantly this week.

The remaining 27% market players are not optimistic, noting that European debt concerns may be reignited and risk aversion will increase since the US economy remains weak and since Francois Hollande, France’s New President, asked other European leaders to renegotiate the fiscal treaty aimed at resolving European debt crisis. Thus, chances are that lead prices will fall below RMB 15,500/mt this coming week.