SHANGHAI, Jun. 21 (SMM) – SHFE 1309 lead contract, the most active one, opened Thursday RMB 70/mt lower at RMB 14,080/mt as the Fed proposed the schedule for scaling back the QE which dragged down LME lead prices. However, SHFE lead was relatively resilient compared with other metals. HSBC announced China’s preliminary manufacturing PMI fell to a nine-month low of 48.3 in June at 10:00 a.m., driving the most active contract price lower. In the afternoon, LME lead continued the downtrend with US dollar rising, combined with the Shanghai Composite Index falling over 2% below 2,100, SHFE 1309 lead contract price dropped further to end at RMB 13,995/mt, a decline of RMB 165/mt or 1.17%, with settlement price at RMB 14,065/mt. Trading volumes for the contract for September delivery increased 342 lots to 502 lots, and positions increased 120 lots to 1,582 lots. The Shanghai/LME lead price ratio was 6.88.
On Thursday, the worse-than-expected HSBC China PMI added to market concerns over the economic outlook, and spot lead prices continued to fall. Prices for Chihong Zn & Ge were offered around RMB 13,870/mt, with discount of RMB 40/mt against the most active SHFE lead contract price, and Nanfang was quoted at RMB 13,840-13,850/mt. Mengzi was offered at RMB 13,830/mt. Downstream buyers were bearish to lead price and not willing to purchase, and traders also bought goods cautiously. Large smelters still mainly fulfill long-term contracts, while SMEs increased supplies due to tight cash flows, with supply for branded lead limited. Spot lead price fell RMB 20/mt in the afternoon, but inquiries were sparse and trading remained weak.