SMM Lead Market Morning Review (2013-2-18)

SHANGHAI, Feb. 18 (SMM) – Macro news was mixed during the Chinese New Year holiday. LME lead prices were resilient to losses, but advanced slowly. The US announced that long-term capital net inflows displayed upward trend in February, a sign that investors are confident about the US economic recovery. Besides, the New York Fed manufacturing index rose and beat forecasts in February. The Michigan Consumer Sentiment Index rose to 76.3 in February. In this context, LME lead prices jumped to USD 2,449/mt after opening at USD 2,412.5/mt during Asian trading hours last Friday. Finally, LME lead prices closed USD 30/mt higher at USD 2,442.5/mt. Trading volumes increased 2,010 lots to 4,966 lots, while positions were up 1,416 lots to 131,000 lots. LME lead inventories grew 75 mt to 287,150 mt. 

In other markets, the US dollar index climbed to near 80.5 and may probably advance further. COMEX silver for March delivery plunged during the holiday, falling from USD 31/oz to USD 29.85/oz, down as much as 3.7%.

There was a lack of clear direction in the movement of LME lead prices during the Chinese New Year holiday. Chinese investors will return to the market now that the holiday is over, and this will likely push up trading volumes of LME lead. LME lead prices should move within USD 2,420-2,450/mt on Monday, and SHFE lead prices will hover around RMB 15,350-15,430/mt after opening slightly higher. Wait-and-see sentiment will dominate the market on the first trading day after the week-long holiday, with traded prices of spot lead expected at RMB 14,800-14,950/mt.