SHANGHAI, May 22 (SMM) – Since the G8 summit has eased market concerns and boosted market confidence to certain degree, SHFE lead prices stopped falling and rallied Monday. LME lead prices opened at RMB 15,195/mt in the morning and moved up since midday influenced by rising domestic stocks, but met strong resistance at the 5-day moving average to finally close at RMB 15,250/mt, up RMB 175/mt or 1.16%. Trading volumes were down 500 lots to 204 lots, while positions were up 68 lots to 1,518 lots.
SHFE lead prices stabilized on Monday. In domestic spot markets, most dealers were not willing to move goods on bullish outlook. Chihong Zn & Ge was initially quoted around RMB 15,250/mt and later climbed to RMB 15,300/mt due to the rising SHFE lead prices. Shuangyan was quoted at RMB 15,240/mt. Offers for lead from Gejiu region were at RMB 15,220/mt. Both sellers and buyers were not actively entering market.
An SMM survey concerning to lead price trends shows that 33% market players are optimistic and believe lead prices should rally mildly this week. The G8 leaders expressed their hopes for Greece to stay in the euro zone and urged the vital role of a powerful and unified euro zone in global economic recovery and stability, offering favorable news to the market. Meanwhile, the US dollar index fell to 81 from a high of 81.76. With respect to market fundamentals, buyers will be more willing to purchase due to bullish outlook with declines in lead prices arrested, and demand in China’s domestic market is expected to improve, hopefully buoying lead prices to certain degree. Besides, spot lead prices will likely edge up slightly following the sharp decrease last week. Thus, spot prices should move between RMB 15,300-15,450/mt.
The remaining 67% investors were relatively conservative, noting that whether Greece will stay in the euro zone remains a doubt given the uncertainties in the euro zone. On the other hand, the remaining sluggish demand downstream will not be able to drive up lead prices. Smelters are not willing to sell due to low prices, leaving both sellers and buyers less active in trading. In this context, spot prices should mainly move between RMB 15,200-15,300/mt this week.