SHANGHAI, Oct. 23 (SMM) – SHFE lead prices opened RMB 100/mt lower at RMB 15,540/mt on Monday. Most investors were pessimistic and were unwilling to enter the market. SHFE lead prices hovered at RMB 15,500-15,550/mt and briefly touched a low of RMB 15,465/mt, a new high since early September. Prices finally closed at RMB 15,520/mt, down RMB 80/mt. Trading volumes fell 12 lots to 80 lots, and positions were up 14 lots to 1,200 lots.
SHFE lead prices gapped lower on October 22, while spot lead prices in China were resistant to declines. Well-known brands including Nanfang and Chihong Zn & Ge were quoted at RMB 15,400-15,410/mt, with spot discounts overt the SHFE 1212 lead contract price narrowing to RMB 100/mt. Mengzi and Dongling were offered at RMB 15,350/mt. Quotations for Hanjiang were at RMB 15,330/mt. Downstream buyers were on the sidelines on Monday, while cargo holders were moving goods aggressively. Only limited transactions were done.
With regard to lead price trends this coming week, most industry insiders were pessimistic. 73% of investors contacted by SMM believe spot lead prices may fall to RMB 15,200-15,300/mt this week, with the SHFE 1212 lead contract price expected to move around the 60-day moving average and LME lead prices between the 5- and 60-day moving averages. Given the weakening demand, downstream enterprises expect lead prices will fall further, combined with limited orders, most buyers will still purchase as needed. Smelters will be forced to move goods due to tight cash flows by month’s end, and domestic lead inventories tend to rise slightly. Besides, China’s GDP data for 3Q was in line with expectations, and CPI dropped below 1.9%, cooling expectations for easing policies by China’s central bank. EU summit made no actual progress in resolving the European debt issues, combined with disappointing performances reported by US companies, market concerns over economic recession were rekindled. Thus, many investors may opt to book profits and leave the market.
27% investors expect LME lead will be relatively resilient and move around USD 2,100/mt, while SHFE lead prices should be between RMB 15,500-15,750/mt, and spot lead prices between RMB 15,300-15,550/mt, with spot discounts of RMB 200/mt over the most active SHFE lead contract price. These market players believe SHFE lead prices may rebound after falling continuously by 3.6% following the National Day holiday. Technical indicators also show a sign of turning around. Besides, LME lead prices decreased again and presented a decline of 8,000 mt last week. In China, high cost at smelters will possibly lend some support to low-end lead prices. Thus, some investors hold a view that downward room for lead prices will be limited.