SHANGHAI, Jan. 15 (SMM) – The SHFE 1303 lead contract price became the most active one on Monday and opened at RMB 15,260/mt. Although the Shanghai Composite Index rose 3% to 2,300, SHFE lead prices failed to increase and mainly moved between RMB 15,240-15,280/mt, and finally closed at RMB 15,270/mt, down RMB 75/mt Trading volumes were down 48 lots to 222 lots, and positions were up 68 lots to 2,170 lots.
Spot lead prices in China also edged down. Chihong Zn & Ge was quoted at RMB 14,750-14,760/mt, with spot discounts of RMB 500/mt over the 1303 SHFE lead contract price. Quotations for Dongling, Hanjiang and Mengzi were mainly at RMB 14,660/mt, and those for Shenqian were RMB 14,630-14,640/mt. Downstream buyers did not actively replenish goods, while selling interest among cargo holders was still strong. Trading was muted on the whole.
According SMM’s survey to 30 industry insiders, 67% of them believe lead price will remain in a narrow band this week. Base metals will be directionless given a lack of significant economic reports. Although the US dollar index is under downward pressures, metals markets are unlikely to be greatly boosted. Spot discounts over LME lead prices remain unabated at USD 10/mt. Technically, LME lead prices should remain vacillating at the current levels in the short term given the resistance between the upper and middle Bollinger bands. Besides, the US companies will release their financial reports for 4Q, and China’s 4Q GDP data should also be unveiled, market will be cautious before the releases. Thus, these investors expect LME lead prices to move around USD 2,330/mt. In China’s spot lead market, most downstream enterprises reflect they will unlikely start replenish stocks for Chinese New Year holiday until the end of January, with spot lead prices expected at RMB 14,650-14,750/mt.
The remaining 33% market players are not optimistic. As China’s CPI staged a rebound in December, triggering concerns over China’s monetary policies and domestic demand. The Shanghai Composite Index also fell noticeably, weighing on base metals. In Europe, the slipping GDP data for Germany in 4Q rekindled investors’ worries. In China, as both sellers and buyers are in need of cash for account settlement and worker’ wages, more sellers are willing to move goods at low prices, while downstream enterprises are reluctant to purchase to avoid risk. In this context, some investors believe spot lead prices will be dragged down to RMB 14,600-14,700/mt this week.