SHANGHAI, Mar. 12 (SMM) – As the US nonfarm payrolls were reported positive, driving up US dollar and weighing down LME lead prices, SHFE lead prices opened lower at RMB 14,560/mt on Monday, and soon rose RMB 200/mt, to hover between RMB 14,760-14,800/mt before closing at RMB 14,765/mt, down RMB 65/mt. Trading volumes were up 68 lots to 212 lots, and positions were up 94 lots to 2,356 lots.
In China’s spot lead market, spot discounts over the most active SHFE lead contract price narrowed to RMB 130/mt on March 11 with the approach of the delivery date. Quotations for Chihong Zn & Ge were at RMB 14,640/mt, while Nanfang was quoted at RMB 14,580/mt. Tongguan and Shuikoushan were quoted at RMB 14,650/mt. Downstream buyers purchased as needed while smelters were still unwilling to move goods, leaving trading muted.
SMM survey reveals that 80% industry insiders are cautious towards lead price trends this week. Most downstream enterprises only purchased according to production needs since outlook for lead price trends is unclear and since orders for downstream enterprises have yet to fully recover, which leaves great inventory pressure. Most cargo holders reflect the falling lead prices and squeezed profits further undermined selling interest, lending certain support to lead prices. With respect to macroeconomic conditions, the US PMI and employment market remained positive. However, the growth of China’s CPI exceeded market expectations in February, and the new lending issued in February was well below January’s level, indicating limited recovery of China’s economy and larger inflationary pressure. In Europe, the euro continued to weaken, and Italy’s rating was cut by the Fitch due to uncertain result for Italy’s election, adding to market concerns. In addition, base metal markets will lack clear guides this week due the absence of important events. Thus, these investors expect LME lead prices to move around USD 2,200/mt and spot lead prices to be RMB 14,550-14,650/mt.
20% market players are bullish to lead price movements this week, noting the nonfarm payroll data which staged a new low since 2008 will continue to benefit base metals. The US equities also hit new highs due to positive economic data, while technical indicators showed the US dollar may meet resistance at 83 with upward room limited. Although the euro keeps falling, European equities present a strong trend. In China’s spot lead market, replenishments will increase with production at lead-acid battery producers recovering gradually, and buying interest should be lifted with declines in lead prices arrested. In this context, these investors believe spot lead prices will increase RMB 50/mt this week to RMB 14,600-14,700/mt, and LME lead prices should move between USD 2,210-2,240/mt.