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SMM Lead Market Morning Review (2014-4-9)
Apr 9,2014 09:53CST
price review forecast
With no major news expected on Wednesday, LME lead prices will continue to be boosted by the decline in the US dollar index, hovering between USD 2,060-2,080/mt.

SHANGHAI, Apr. 9 (SMM) – LME lead prices overnight started at USD 2,061.5/mt, and then hovered between USD 2,060-2,065/mt in the Asian trading hours with the lack of major news. During the European and US trading session, LME lead prices initially dipped to USD 2,055/mt, and later rebounded to a high of USD 2,076/mt, boosted by a sharp fall in the US dollar index. The metal closed up USD 10/mt at USD 2,074/mt. Traded volumes gained by 323 lots to 3,407 lots, positions shed by 637 lots to 144,406 lots, and LME lead stocks increased by 375 mt to 202,400 mt.

Investors were mostly focused on several US Federal Reserve officials’ speeches concerning easy monetary policy with the dearth of market-driven news. Narayana Kocherlakota, president of the Minneapolis Fed, stated the US Fed should further cut the fed funds rate and also consider lowering excess reserve ratio to facilitate US economic recovery. Philadelphia Fed President Charles Plosser noted that the Fed should adjust its forward guidance to some extent and offer more conditions for the tightening of its monetary policy. He also added that it would be quite some time to come before the Fed could pull out of support to the US economy eternally. In response to these dovish comments, the US dollar index notched a sharp fall, closing lower for a fourth straight trading day and helping support base metals prices.

The Ukraine crisis continued to deteriorate on Tuesday. The Ukraine police was reported to arrest 70 people occupying local government building in eastern city Kharkiv, but pro-Russia protestors in other two cities still held their ground. The Ukrainian government declared that these violent acts were fermented by Russia to split Ukraine. Russian Foreign Minister Sergei Lavrov also warned that using force to end the protests in eastern Ukraine could lead to civil war. US Secretary of State John Kerry said that “recent events could potentially be a contrived pretext for Russian military intervention just as we saw in Crimea”. In this context, market risk aversion sentiment rose, with London gold prices closing up 0.88%. As capital flocked in the euro zone from Ukraine and Russia for risk aversion, the euro finished higher, buttressing base metals prices

Meanwhile, the International Monetary Fund (IMF) lowered its forecast for 2014 global GDP growth to 3.6%, down from 3.7%, but remained its 7.5% growth forecast for China’s GDP this year.

Main European share indexes finished lower, while US shares stabilized temporarily. Asian shares were mixed, and the Shanghai Composite ended up 1.92%, aided by the strength in banking shares. LME base metals prices closed higher, except for LME tin and nickel prices.

With no major news expected on Wednesday, LME lead prices will continue to be boosted by the decline in the US dollar index, hovering between USD 2,060-2,080/mt. The most active SHFE 1405 lead contract price is set to move between RMB 13,730-13,830/mt, and spot lead prices is predicted to fluctuate between RMB 13,650-13,750/mt on Wednesday.

LME lead prices
SHFE lead prices
spot lead prices

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