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SMM Lead Market Morning Review (2014-3-17)
Mar 17,2014 10:10CST
price review forecast
LME lead prices are expected to move between USD 2,030-2,055/mt, and the most active SHFE 1404 lead contract price is set to fluctuate between RMB 13,570-13,670/mt.

SHANGHAI, Mar. 17 (SMM) – LME lead prices last Friday led rises among all base metals prices to start at USD 2,023/mt, and then trended higher to close up USD 25/mt or 1.24% at USD 2,047/mt. Trading volumes shrunk by 300 lots to 3,931 lots, positions gained by 292 lots to 136,794 lots, and LME lead inventories contracted by 550 mt to 201,850 mt.

The most active SHFE 1404 lead contract price followed LME lead prices up to gap higher at RMB 13,615/mt, and ended up RMB 55/mt or 0.41% at RMB 13,615/mt in last Friday’s night trading session. Only 26 lots were traded, and price gap between the highest and the lowest was RMB 10/mt.

The outcome of the Crimean referendum ending on March 17 showed more than 90% voted to join Russia. In response, US President Barack Obama emphasized in a telephone call with his Russian counterpart Vladimir Putin that the US and international community will never recognize the outcome of the referendum since it went against Ukraine’s constitution. President Obama added the US and its European allies are prepared to make Russia pay higher prices for its role in the situation. However, even on the eve of the referendum, Russia had taken military actions in eastern Ukraine out of Crimea. In this context, the geopolitical crisis in Ukraine is unlikely to be resolved thoroughly in the short term given strong stances of the three parties.

US February PPI fell by 0.1% MoM and 0.9% YoY, respectively, missing January’s 0.2% and 1.2%. The University of Michigan’s consumer sentiment index was reported at 79.9, undershooting the 82 forecast. These downbeat economic data put a lid on US stocks and the US dollar index.

The Chinese authorities recently highlighted a series of problems in the process of urbanization, and set the urbanization rate at around 60% for permanent resident population and at about 45% for household population. More than RMB 1 trillion will be spent on rebuilding shanty towns. In addition, the daily swing for the yuan trading against the US dollar will be widened to 2% from 1% since March 17 in foreign exchange markets, a sign of further progress in foreign exchange rate reform.

European and US stock indexes fell across the board. LME base metals prices, except for LME zinc prices, closed higher.

Investors should pay attention to US February industrial production, capacity utilization rate, and NY Fed Manufacturing Index for March due for release on Monday. LME lead prices found support at USD 2,020/mt for a third consecutive trading day, while positions also increased for three days in a row. Boosted by bargain-hunting activities and technical support below, LME lead prices are expected to test resistance at the 5-day moving average and  to move between USD 2,030-2,055/mt on Monday. The most active SHFE 1404 lead contract price is set to fluctuate between RMB 13,570-13,670/mt. In China’s physical lead markets, traded prices should be RMB 13,600-13,750/mt on Monday.


LME lead prices
SHFE lead prices
spot lead prices

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