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SMM Daily Review - 2012/5/28 Lead Market
May 29,2012 09:44CST
smm insight
According to SMM survey to 30 enterprises, opinions were divided on lead prices this week.

SHANGHAI, May 29 (SMM) – On Monday, SHFE lead prices opened RMB 50/mt higher at RMB 15,200/mt and stabilized. SHFE lead prices rose above the 10-day moving average influenced by increase in domestic stock markets to finally close at RMB 15,300/mt, up RMB 145/mt. Trading volumes were up 72 lots to 174 lots, while positions increased to 1,806 lots, up 20 lots.

In China’s domestic spot market, offers were fewer with most market players expecting prices to increase. Quotations for Chihong Zn & Ge were initially at RMB 15,260/mt, with premiums of RMB 50/mt over the most active SHFE lead contract price, but rose to RMB 15,290/mt along with SHFE lead prices. Prices for brands from Gejiu region were at RMB 15,160/mt. Trading remained light on the whole.

According to SMM survey to 30 enterprises, opinions were divided on lead prices this week. 13% industrial insiders were pessimistic, noting that the market was still largely influenced by the worsening Greek debt issue, fresh concerns over Spanish debt financing, and the lower-than-expected economic data in China and the euro zone. Market was dominated by bearish moods at present. In China’s domestic markets, some smelters will be more willing to move goods due to financial pressures at month’s end, causing supply to increase in the market, which will be unfavorable for lead prices to move up. Thus, it is believed spot lead prices should hover around RMB 15,000/mt this coming week.

27% market players were optimistic, holding a view that lead prices will likely rise to RMB 15,300/mt. The May Michigan Consumer Confidence Index was reported above expectations, somewhat easing market worries on the European debt crisis, and no more negative news are expected with macro economy tending to stabilize. Besides, LME lead inventories are still in declines. In China, output at Chihong Zn & Ge, one of the major brands traded in Shanghai lead market, will reduce on account of maintenance. The decreased supply in Shanghai market should help support spot lead prices.

The remaining 60% market players believe lead prices will not show significant change this week and just move between RMB 15,100-15,250/mt. The pending Greek issue may result in uncertainties in the market and directionless SHFE lead prices. Meanwhile, consumption in China’s domestic market is hard to improve as poor orders frustrate lead-acid battery producers. In these circumstances, there’s little chance lead prices will rebound in short term.

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