SHANGHAI, Oct. 30 (SMM) – Since the optimistic US GDP data failed to boost market confidence, SHFE lead prices opened at RMB 15,210/mt and followed a weak trend between RMB 15,180-15,200/mt on October 29. In the afternoon, domestic stock markets dropped to a low 2,053, adding to bearish mood in the market, with many investors booking profits. In response, SHFE lead prices fluctuated down to hit RMB 15,130/mt, a new low in eight months, to finally close at RMB 15,175/mt. Trading volumes were down 134 lots to 136 lots, while positions were up 10 lots to 1,214 lots.
In China’s spot lead market, cargo holders cut prices for sales as the month came to an end. Nanfang and Chihong Zn & Ge were mainly traded at RMB 15,000-15,020/mt, with spot discounts over the most active SHFE lead contract price at RMB 160/mt. Dongling and Mengzi were offered at RMB 14,970-14,980/mt. Quotations for Shenqian were lowered to RMB 14,900/mt. However, trading was light due to low buying interest and pessimistic mood among downstream enterprises.
SHFE lead prices kept falling during October and were down from RMB 16,000/mt to around RMB 15,000/mt. An SMM survey to 30 industry insiders indicates that 53% market players believe lead prices will unlikely fall further this coming week, but should move between RMB 15,000-15,100/mt, with LME lead prices expected to test USD 2,000/mt and the most active SHFE lead contract to hover around the 5-day moving average. These investors expect SHFE lead prices to rise after falling nearly 6% during October. SHFE lead positions continued to contract as investors remained cautious and were reluctant to enter the market, leaving little opportunities for continuous slips in lead prices. With respect to macroeconomic conditions, the Fed kept its interest rate unchanged after policy meeting, and PMI data in the Europe were weak, with most worrying signals coming from the economic downturn in Germany. In China, rigid demand remained sluggish, and the persistent high spot discounts over the most active SHFE lead contact price also reflected bearish outlook among lead-acid battery producers. Downstream enterprises were unwilling to purchase, while supplies from smelters were ample due to needs for cash flows by month’s end. Thus, lead prices are not unlikely to pick up.
47% market players were relatively optimistic, believing the 18th National Congress of the Communist Party of China will boost Chinese stock markets to certain degree. Besides, HSBC flash China manufacturing PMI in October hit a 3-month high, also promoting Chinese stocks, which may lend some support to lead prices. In China’s domestic spot markets, the tight finance at smelters will be eased in early November, so selling interest will be lower against falling lead prices. Lead prices should thus gain certain support due to reduced supplies. In this context, these investors expect SHFE lead prices will move between RMB 15,250-15,450/mt, and spot lead prices should be RMB 15,100-15,250/mt, with spot discounts over the most active SHFE lead contract price at RMB 150-200/mt.