SHANGHAI, Jul. 24 (SMM) –SHFE lead prices moved down after gapping RMB 200/mt lower at RMB 14,805/mt July 23, but stabilized to touch RMB 14,900/mt with resistance at the 30-day moving average. In the afternoon, SHFE lead fell again to an intraday low of RMB 14,780/mt due to the slumping LME lead prices, to finally close at RMB 14,805/mt, down RMB 190/mt. Trading volumes were down 44 lots to 328 lots, while positions increased 64 lots to 2,586 lots.
In China’s spot lead market, offers for some brands fell below RMB 15,000/mt again. Shenqian and Mengzi were mainly quoted between RMB 14,960-14,980/mt, and Shuikoushan was quoted at RMB 15,000/mt. Quotations for Nanfang were RMB 15,050/mt, with spot premiums of RMB 160/mt over the most active SHFE lead price. Selling interest at smelters was low as lead prices dropped, while downstream buyers remained cautious due to bearish outlook. In the afternoon, prices for Shuikoushan were lowered to RMB 14,960-14,980/mt.
SMM’s survey to 30 domestic enterprises reveals that 60% industry insiders believe lead prices may fall this coming week, with LME lead prices expected at USD 1,860/mt and SHFE lead prices possibly touching a low of RMB 14,800/mt, and spot lead prices will likely drop below RMB 15,000/mt again. Currently, market is dominated by negative news. Spain’s bond yields have been climbing to creating a new high of 7.18%, mirroring the escalation of the European debt crisis. In the US, initial jobless claims last week and June home sales were both below expectations. In consequence, the US dollar index rose above 83.5. In China’s domestic spot markets, cargo holders will be more reluctant to sell goods if lead prices fall below RMB 15,000/mt. Meanwhile, downstream buyers will be less willing to purchase on bearishness.
The remaining 40% industry insiders expect lead prices will hover around RMB 15,000/mt. Although market confidence is depressed by the escalation of the European debt crisis, SHFE lead remains relatively resilient compared with LME lead prices. Moreover, LME lead inventories continued reducing last week and were down 6,250 mt, with canceled warrants up by nearly 10,000 mt. In China’s spot lead market, demand downstream improved modestly with purchases inching up. Coupled with the tighter supply caused by maintenances at smelters, lead prices should gain certain support. However, the negative economic conditions will limit increase.