SHANGHAI, Apr. 2 (SMM) –SHFE 1305 lead contract price gapped lower at RMB 14,300/mt on Monday without guide from the LME lead and fell along with SHFE copper to RMB 14,215/mt. Although China’s official manufacturing PMI for March was reported above forecast and previous level, depressed demand for spot lead caused left little impetus for futures price to rise. Thus, SHFE 1305 lead contract price moved between RMB 14,260-14,300/mt before ending at RMB 14,290/mt, down RMB 60/mt from the previous trading day. Traded volumes fell 248 lots to 130 lots, positions fell 22 lots to 1,934 lots.
SHFE lead prices gapped lower on Monday, and spot lead prices fell. Most smelters reflected spot prices were lower than their cost lines and were not willing to sell goods. Some traders cut prices to sell goods given bearish outlook. Chihong Zn & Ge was quoted at RMB 14,240-14,250/mt, with spot discounts of RMB 50/mt against the most active SHFE lead contract price. Nanfang was traded at RMB 14,220/mt, and price for Yubei was flat with SHFE 1304 lead contract price. Quotations for other brands were rarely heard. Market remained quiet in the afternoon, and downstream buyers were not will to purchase due to limited orders.
LME is closed at the beginning of this week for the Easter holiday, and SHFE will also be closed for the last two trading days due to the Qingming holiday, which may prompt investors to stay out of the market.
SMM survey reveals that 60% industry insiders expected trading in base metal market to remain quiet before the policy meetings of major central banks and release of economic data in the latter half of this week given the closure of LME and SHFE. LME lead prices are expected to hover narrowly between USD 2,100-2,150/mt. In China’s spot markets, the persistently low lead prices and onset of low-demand season for downstream producers will leave consumption soft. Despite the approaching Qingming holiday, most downstream buyers may not replenish stocks in large amount for avoiding risk. Lead smelters will hold prices firm at the beginning of the month. Thus, many market players believe spot lead pries will move between RMB 14,250-14,350/mt this week.
The remaining 40% industry insiders are pessimistic. LME copper prices have fallen below USD 7,550/mt and will likely fall further, while the US dollar stands above 83. Besides, leaders of Italy failed to form a new government, and issues still exist for Cyprus bailout plan. In China, the introduction of specific rules for property market control by local governments will dampen base metal demand from housing sector. In this context, LME lead prices may possibly fall below USD 2,100/mt this week. Spot lead prices in China are expected to be RMB 14,150-14,250/mt as downstream buying interest will be undermined given falling lead prices.