SHANGHAI, Apr. 9 (SMM) – SHFE 1306 lead contract price started lower at RMB 14,340/mt on Monday influenced by the falling LME lead prices last Friday, and gained buying support at RB 14,400/mt. Although domestic stock markets gapped lower to fall below 2,200, the SHFE lead contract remained resilient with price finally closing up RMB 75/mt to RMB 14,425/mt. Trading volumes were down 72 lots to 134 lots, while positions were up 48 lots to 2,066 lots.
Quotations for spot lead in China were also flat with the level before Qingming Festival, but traded prices fell. Quotes for Jinsha were around RMB 14,220/mt, but traded price was RMB 14,180/mt, with spot discounts over the most active SHFE lead contract price at RMB 210/mt. Quotations for Nanfang, Yubei, and Tongguan were flat at the most active SHFE lead contract price, but transactions were rarely done. Prices for Hanjiang, Shuangyan, and Yunxi were offered at RMB 14,150-14,170/mt. Smelters were not willing to move goods, and downstream consumption remained weak.
According to SMM survey, 60% of industry insiders hold a cautious attitude to lead price trends this week. With fewer economic reports expected this week, market will focus on financial reports of US companies. Although the US nonfarm payrolls and unemployment rate were reported negative, the stabilizing US economic recovery is undeniable. In addition, the Cyprus bailout deal eased market concerns over euro zone economy. These may drive LME lead prices hover around USD 2,060/mt and test the 5-day moving average. In China’s spot lead markets, some lead-acid battery producers started to cut prices due to limited orders and excess inventories, but consumption remained soft. Lead smelters remained unwilling to move goods after lead prices fell below RMB 14,500/mt. Thus, lead prices will unlikely show sharp movement and are expected to be between RMB 14,200-14,300/mt this week.
The remaining 40% investors are more pessimistic, noting the depressed nonfarm employment data indicate the US economic recovery is far from optimistic. Some market players expect the Fed will continue the easing measures. In the euro zone, manufacturing PMI, new order index and output index all slipped in March, signifying further contraction in manufacturing sector and leaving unemployment rate high. China’s H7N9 also exerted influence on market, hurting tourism and agriculture and dragging down the Shanghai Composite Index. Transactions for spot lead are rare at present, with some goods traded for arbitrage, but supply in China’s spot lead market remain ample. Downstream buyers are selling down finished goods inventories while cutting raw material purchases at the same time. As a result, these investors believe spot lead prices will be RMB 14,100-14,200/mt.