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SMM Lead Market Morning Review (2014-4-4)
Apr 4,2014 09:32CST
price review forecast
LME lead prices are expected to hover between USD 2,040-2,065/mt, and the most active SHFE lead 1405 lead contract price is set to fluctuate between RMB 13,620-13,730/mt.

SHANGHAI, Apr. 4 (SMM) – LME lead prices overnight essentially moved between USD 2,050-2,055/mt after starting at USD 2,055/mt in Asian trading hours. During the European trading session, the European Central Bank decided to leave its interest rate on hold, but relatively dovish comments by ECB President Mario Draghi subsequently weighed down the euro. As a result, the US dollar index staged a sharp rally, sending LME lead prices down to a fresh half-month low of USD 2,032/mt. The metal later followed other base metals prices up to end down USD 1.5/mt, or 0.07%, at USD 2,054/mt. Traded volumes gained by 674 lots to 4,562 lots, positions added by 3,311 lots to 141,628 lots, and LME lead inventories held flat at 201,650 mt.

SHFE lead prices opened at an intraday low of RMB 13,615/mt and finished down RMB 30/mt at RMB 13,675/mt during Thursday’s night session. Traded volumes were only 136 lots.

The European Central Bank kept its key interest rate unchanged at Thursday’s policy meeting. The ECB chief Draghi said the euro zone was experiencing a mild recovery and suffered no deflation risk. He added that CPI is expected to recover in April. However, he also suggested opinions on the current inflation data have been divided among the ECB officials. There was still a possibility that the central bank may adopt unconventional policies. The euro fell back after rising initially in the wake of the meeting result.

The ISM non-manufacturing index fell short of forecast and came in at 53.1 in March, but higher than the 51.6 in February. ISM said the non-manufacturing employment gauge shot higher in March, up 6.1 points to 53.6%, fueling optimism for nonfarm payroll data. Trade deficit for the US expanded by 7.7% in February and came to a five-month high, due mainly to slipping exports.

Service PMIs for Germany, France, Italy, and the euro zone for March were all revised downward, but the euro zone composite index for the same month remained above 50 for a ninth month at 53.1, though slightly below February’s index. Markit thus estimated the single currency union may realize a 0.5% growth in the first quarter.

In China, the press release for People’s Bank of China’s Q1 meeting emphasized that China’s economic growth was still within reasonable range and the government will push on with further financial reforms, suggesting the central bank’s confidence in Chinese economy. The PBOC drained a net RMB 62 billion from the market, representing the eighth straight week of drainage. Liquidity will tighten in mid-April with commercial banks due for handing over reserves.

The US and European stocks were mixed on Thursday, with most indices in the US stock market falling. Copper and lead on London Metal Exchange performed more poorly than other base metals.

Investors are not optimistic towards the US labor market in March due to a string of recent mixed economic data with US nonfarm payrolls due Friday on their radar screens. LME lead prices are expected to hover between USD 2,040-2,065/mt, and the most active SHFE lead 1405 lead contract price is set to fluctuate between RMB 13,620-13,730/mt. In China’s physical lead markets, traded prices should be in the RMB 13,600-13,700/mt range on Friday, the last trading day before the Tomb Sweeping Day holiday.


LME lead prices
SHFE lead prices
spot lead prices

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