SMM Lead Market Morning Review (2014-4-23)

SHANGHAI, Apr. 23 (SMM) – LME lead prices overnight started flat at USD 2,144.8/mt in the Asian trading session after a two-day trading pause, and then hovered between USD 2,140-2,145/mt, with caution prevailing among investors. During European and US trading hours, the metal trended higher, boosted by positive economic releases, and closed up USD 22.8/mt at the high of USD 2,165/mt. Traded volumes gained 477 lots to 4,404 lots, positions added 50 lots to 137,196 lots, and LME lead stocks shed 1,675 mt to 198,725 mt.

The most active SHFE 1405 lead contract price tracked LME lead prices up to RMB 13,965/mt after opening Tuesday’s night session at RMB 13,870/mt, and finished up RMB 130/mt at RMB 13,965/mt. Traded volumes stood at 326 lots as against Monday’s 2 lots, while positions lost 14 lots to 6,472 lots.

US existing home sales rebounded in March to an annualized rate of 4.59 million, down 0.2% from February, a smaller fall than the estimated 0.9% decline, indicating that the recovery in the nation’s property market was gaining momentum. Meanwhile, the Richmond Fed’s manufacturing index for April was reported at 7, handily beating market expectations. Recent financial reports released by major US enterprises also were encouraging, helping boost market sentiment and sending main three US share indexes up across the board. The eurozone’s April consumer confidence index posted a new high last seen in October, 2007, which pushed up the euro to 1.3824 against the US dollar.

The Ukrainian government declared to resume anti-terrorism operations in eastern regions of the country and blamed two deaths on pro-Russian protestors, while the Pentagon also announced to launch military exercise in east Europe. These intensifying moves suggested that the ceasefire agreement reached in Geneva last week was no longer effective.

The Chinese Securities Regulatory Commission made public late Tuesday a third batch of 19 enterprises planning for IPOs. As a result, the number of enterprises disclosing IPO plans reached a total of 65, adding to downward pressure on China’s stock markets.

The US dollar index eased 0.07%, while the euro closed up 0.09% against the US dollar. Asia-Pacific stocks were mixed, but European and US stocks all ended higher. LME base metals prices finished with gains, except for copper.

The HSBC’s China manufacturing PMI due for release Wednesday is expected to be comparatively encouraging, helping bolster base metals. LME lead prices are set to climb to the USD 2,150-2,180/mt trading range, while the most active SHFE 1405 lead contract price is forecast to rise sharply to RMB 13,920-14,020/mt. In China’s physical lead markets, traded prices should be RMB 13,800-13,950 on Wednesday.