SHANGHAI, Jun. 4 (SMM) – SHFE 1307 lead contract price started higher at RMB 14,060/mt boosted by the rising LME lead prices last Friday, and moved between RMB 14,030-14,060/mt. Prices gained buying support at RMB 14,050/mt and rose before closing at RMB 14,090/mt, up RMB 85/mt. Trading volumes fell 88 lots to 120 lots, and positions increased 12 lots to 2,104 lots.
Spot lead prices in China increased RMB 50/mt on Monday, as some downstream buyers began replenishing goods for the Chinese Dragon Boat Festival. Chihong Zn & Ge was quoted at RMB 13,950/mt, with spot discounts of RMB 100/mt over the most active SHFE lead contract price. Tongguan was quoted at RMB 13,920/mt, and Hanjiang was offered at RMB 13,900/mt, with traded prices RMB 20/mt lower than quotes. Cargo holders moved goods normally. Trading improved from last week.
According to the latest SMM survey concerning lead price trends this week, industry insiders believe lead prices will keep vacillating or stage a slight rebound this week.
Of the market players contacted by SMM, 60% believe LME lead prices will unlikely maintain the strong trend this week following last week’s 6% surge, and may hover around USD 2,200/mt. SHFE 1307 lead contract price will test RMB 14,000/mt and spot lead prices may remain below RMB 14,000/mt. The US economic figures were reported mixed, and direction of US dollar index remains unclear. Besides, EU economy is experiencing a mild recession with unemployment rate in Spain and Italy still high, adding to uncertainty to European debt crisis. China’s recovery is also weak. Meanwhile, LME copper met strong resistance at USD 7,400/mt, which may add to drags on other base metals. In China’s spot lead markets, most market players believe the pre-holiday replenishments by downstream buyers ahead of the Chinese Dragon Boat Festival may not reverse the depressed consumption. Thus, lead prices will obtain little support.
The remaining 40% industry insiders are relatively upbeat, noting that LME lead inventories have fallen about 30,000 mt since May to the 219,000 mt at present, with canceled warrant ratio soaring to 77%, while the USD 8/mt spot discount for LME lead also turned to a premium of USD 6/mt. These may help bolster further increase in LME lead prices. Technically, LME lead prices have crossed above the middle Bollinger band, which allows the prices greater chance to stand above USD 2,200/mt this week. In China, spot lead prices are only RMB 50/mt below the RMB 14,000/mt mark. Bullish smelters will be reluctant to move goods at prices lower than RMB 14,000/mt, leaving supplies limited. Downstream buying interest may improve prior to the Chinese Dragon Boat Festival. In this context, spot lead prices may be driven to rise above RMB 14,000/mt.