SHANGHAI, Mar. 19 (SMM) – The most active SHFE lead contract price fell RMB 100/mt soon after opening lower at RMB 14,650/mt on Monday due to the unsteady political situation in the Europe. The contract then hovered near RMB 14,500/mt with LME lead falling below USD 2,200/mt and domestic stocks slipping 1.6%, to finally end at RMB 14,490/mt, down RMB 245/mt. Trading volumes increased 80 lots to 302 lots, while holdings were down 60 lots to 2,184 lots.
Spot lead prices fell below the cost line, so cargo holders were more reluctant to move goods, leaving quotations rare. Quotations for Chihong Zn & Ge and Nanfang were mainly at RMB 14,480/mt, with spot premiums of RMB 20/mt over the most active SHFE lead contract price. Shuangyan was quoted at RMB 14,400/mt. Downstream enterprises intended to purchase at low prices, but cargo holders were unwilling to sell, leaving transactions limited.
SMM survey revealed that most industry insiders are pessimistic to lead market this week following the continuous decline.
67% market players believe spot lead prices will continue to remain low at RMB 14,400-14,550/mt this week due to a lack of impetus, while LME lead prices are expected to hover around USD 2,200/mt. The Fed will determine the interest rate decision and scale of QE measures at its policy meeting for March scheduled to be held this week, and the latest US economic forecast will also be unveiled. This will be essential to the US dollar movement. Most investors booked profits before the meeting as the results are far from clear. In China’s spot lead market, smelters will be more reluctant to sell goods due to falling lead prices, while downstream enterprises will purchase cautiously, leaving prices vacillating.
The remaining 33% market players were even more pessimistic, noting that LME copper which is heading to the lower Bollinger band and tends to stage noticeable decline will drag down other base metals prices, and LME lead prices may possibly fall below USD 2,150/mt. Besides, the euro zone conditionally provides aids to Brussels, triggering market concerns over its exit from the euro zone. Plus the political issue in Italy, the decline in the euro may be accelerated, driving up the US dollar index and weighing down the base metals. Meanwhile, the weak demand in spot lead market may drive lead prices to fall further with the onset of the low-demand season for lead-acid batteries. Smelters which have been unwilling to move goods during the first half this month will be forced to sell goods due to increasing inventory and sales pressures. In this context, these investors expect spot lead prices to move between RMB 14,350-14,450/mt this week.