SHANGHAI, Feb. 25 (SMM) – SHFE lead prices failed to move higher following the holiday, hovering between RMB 15,250-15,350/mt during the first three trading days last week, then later falling to RMB 15,000/mt on Thursday due to a 3% loss by the Shanghai Composite Index. SHFE lead prices should meet resistance at the 5-day moving average, but find support at RMB 15,000/mt this week.
In China’s domestic spot markets, demand was also depressed, with spot lead mainly traded at RMB 14,800-14,930/mt early last week, and with spot discounts of RMB 350-400/mt over the most active SHFE lead contract price, which later shrank to RMB 270/mt as SHFE lead prices fell. Some arbitrage traders thus booked profits. However, as supply from smelters tightened due to production cuts, smelters without any strong financial pressure were able to hold prices firm. Downstream enterprises are not expected to fully resume production until after the Lantern Festival on February 24, so consumption remains soft. Downstream consumption is expected to recover this week as most enterprises resume production. Traders should continue to hold prices firm, with spot lead prices expected at RMB 14,700-14,850/mt.