SMM Lead Market Morning Review (2014-4-25)

SHANGHAI, Apr. 25 (SMM) – LME lead prices overnight started at USD 2,154/mt in Asian trading hours and then trended higher with a bullish sentiment dominating the market. During European and US trading hours, the metal advanced to a high of USD 2,181/mt, and closed up USD 21/mt at USD 2,178/mt, helped by a series of positive economic releases. Traded volumes shed 941 lots to 3,484 lots, positions lost 994 lots to 133,490 lots, and LME lead stocks tumbled 1,500 mt to 194,775 mt.

The most active SHFE lead contract price opened Thursday’s night session at RMB 13,950/mt, and later crept up as high as RMB 13,980/mt, boosted by LME lead prices. The contract price however, retreated subsequently to a trough of RMB 13,900/mt, and ended up RMB 15/mt at RMB 13,940/mt.

US durable goods orders rose by 2.6% in March, the biggest monthly rise since November 2013, suggesting that the country’s economic growth recovered from unusually cold winter weather seen at the end of last year and early this year. Initial jobless claims for last week added 24,000 to 329,000, exceeding forecasts and the previous week’s figures and hitting the largest weekly gain since last December. The 4-week moving average of the jobless claims, however, maintained at recent lows, while continuing jobless claims notched a fresh low last seen in December 2007. Given these relatively encouraging economic reports, market participants are bullish on US April nonfarm payrolls scheduled for release next week. Apple’s financial report for the first quarter showed late Thursday that its profits and operating income both came ahead of market expectations, fueling momentum in US stock market.

Markets responded little to the speech delivered by European Central Bank Mario Draghi since he failed to offer new guidance on the ECB’s monetary policy.

In China, the People’s Bank of China (PBOC) withdrew a total of RMB 42 billion from open markets following a series of operations, while commercial banks had to submit fiscal deposit in large amounts by the end of April. The Shanghai Interbank Offered Rate (Shibor) also rose back Thursday to 4.32% from last Friday’s 3.93%, up for three straight trading days.

The US dollar index drifted 0.13% lower, while the euro crept up 0.11% against the US dollar. European and US stocks rose across the board, but Asia-Pacific stocks mostly closed lower. LME gold and silver finished up 0.73% and 1%, respectively. LME base metals all ended with gains except for nickel.

Comparatively positive US economic data will help boost market sentiment on Friday. LME lead prices are expected to move between USD 2,160-2,190/mt, while the most active SHFE 1405 lead contract price is set to hover between RMB 13,900-14,000/mt. In China’s physical lead markets, traded prices should be in the RMB 13,850-13,950/mt band on Friday.