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SMM Lead Market Morning Review (2013-11-28)
Nov 28,2013 10:14CST
price review forecast
LME lead price is forecast to move between USD 2,065-2,085/mt, while the most active SHFE lead price is expected to range between RMB 13,850-13,950/mt.

SHANGHAI, Nov. 28 (SMM) – LME lead price overnight started at USD 2,092.3/mt and later traded between USD 2,090-2,095/mt in light volumes. The upbeat US initial jobless claims reinforced expectations over the QE tapering. In response, the US dollar index bounced back at the tail of the trading. The euro narrowed its gains against the US dollar, affected by Italy’s political turmoil, exerting downward pressure on LME lead price. As a result, LME lead dipped to USD 2,071.5/mt, close to a trough of USD 2,067/mt reached last week, and finally finished USD 22/mt or 1.05% lower at USD 2,073.5/mt. Trading volumes expanded 1,753 lots to 4,625 lots, while open interest added 704 lots to 120,814 lots. LME lead price will be restrained to some extent by the continued outflow of capital on Thursday, the US Thanksgiving holiday. Attention will be on a string of European economic data on Thursday. LME lead is expected to stage a weak performance and test previous support at USD 2,067/mt.

Wednesday offered a mixed bag of US economic data. Durable goods orders dipped 2% MoM in October. Orders for core capital goods, which factor out aircrafts and national defense durable goods, also slipped 1.2% from a month ago, worse than expectations for a 0.8% growth. Looking on the bright side, the University of Michigan’s final reading on US consumer sentiment was 75.1 in November, capping the 73.1 estimate. Initial jobless claims for unemployment benefits last week fell unexpectedly to a two-month low of 316,000. However, positive data strengthened the greenback, pressuring commodity markets. Capital flowed out of base metals markets into US stock markets ahead of the Thanksgiving Day. The result was that base metals prices drifted lower, while US stocks hit highs.

In Europe, Angela Merkel and the Social Democratic Party (SDP) reached a consensus Wednesday to form a coalition government. The Italian government won a confidence vote from the Senate regarding the 2014 budget, with Silvio Berlusconi's party losing control over the Italian government. This will pave the way for the country’s economic recovery. GDP in the UK grew 0.8% QoQ and 1.5% YoY in Q3, in line with forecasts. Germany’s GfK consumer confidence index for December jumped to its highest level in more than six years at 7.4
Stocks on both sides of the Atlantic rose. LME base metals suffered losses across the board.
LME base metals prices will move in a weaker manner, while SHFE metals prices will be pressurized by strong capital outflow for risk aversion due to the US Thanksgiving holiday. LME lead price is forecast to move between USD 2,065-2,085/mt, while the most active SHFE lead price is expected to range between RMB 13,850-13,950/mt. In China’s spot lead market, traded price is expected between RMB 13,800-13,950/mt on Thursday.


LME lead price
SHFE lead price

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