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SMM Lead Market Morning Review (2014-6-6)
Jun 6,2014 10:03CST
price review forecast
LME lead prices are set to move between USD 2,090-2,120/mt, while the most active SHFE 1408 lead contract is expected to hover between RMB 13,980-14,050/mt.

SHANGHAI, Jun. 6 (SMM) – LME lead prices overnight hovered narrowly around USD 2,100/mt after starting at USD 2,111.5/mt during Asian trading hours. The metal initially dipped to a low of USD 2,096/mt during European and US trading hours, but later rebounded to close down USD 3.3/mt at USD 2,104/mt. Traded volumes lost 2,003 lots to 3,722 lots, while positions shed 531 lots to 130,117 lots. The latest LME lead inventories contracted 50 mt to 190,375 mt.

The most active SHFE 1408 lead contract opened Thursday’s night session at RMB 14,015/mt, with the upper end at RMB 14,050/mt and the lower end at RMB 13,995/mt, and finished up RMB 10/mt at RMB 14,020/mt. Traded volumes for the contract were only 8 lots among a total of 28 lots, while positions fell 4 lots to 5,016 lots.

The European Central Bank lowered its benchmark interest rate to a record low of 0.15% from 0.25%, and also imposed a negative interest rate of 0.1% on deposits, down from zero. Mario Draghi, President of the ECB, also announced at subsequent press conference that the ECB would end the Securities Markets Programme (SMP) and is mulling over purchases of asset-backed securities (ABS). He added that the central bank will be conducting a series of targeted longer-term refinancing operations (TLTROs), which will mature in 2018 and be worth EUR 400 billion. Meanwhile, the ECB president signaled that the ECB has started preparing for quantitative easing (QE). A series of these accommodative monetary policies sent European and US shares up, helping boost base metals prices. In addition, the Bank of England put its benchmark interest on hold Thursday at a low of 0.5% and maintained 375 billion pounds of bond purchases to prop up the country’s economic recovery.

The US Labor Department reported that the country’s initial jobless claims added 8,000 to 312,000 for the week ending May 31. MarketWatch also revealed that the jobless claims stood at a seasonally adjusted rate of 311,000 based on the average estimate by the surveyed economists. Meanwhile, the jobless claims for the week ending May 23 were revised slightly to 304,000, up from the preliminary figure of 300,000. The continuing jobless claims for the week ending May 24 fell 20,000 to a seasonally adjusted rate of 2.6 million , hitting the lowest level since October 2007. Following the release of these reports, US stock indices and futures prices expanded earlier gains, while US Treasury prices edged up.

HSBC’s China service PMI for May released Thursday fell to a fresh 4-month low of 50.7, pointing to persistently weak sentiment at private companies. The International Monetary Fund (IMF) stated Thursday that the Chinese economy is expected to grow 7.5% this year, helped by improving economic outlook across the globe.

The US dollar index eased 0.38%. The euro ticked up 0.45% against the US dollar. Global shares rose across the board. LME base metals prices showed mixed performance.

A series of accommodative monetary policies should give a boost to base metals prices, but US nonfarm payrolls due for release Friday could restrain market risk appetite. LME lead prices are set to move between USD 2,090-2,120/mt, while the most active SHFE 1408 lead contract is expected to hover between RMB 13,980-14,050/mt. In China’s physical lead markets, traded prices should be in the RMB 13,850-14,000/mt range on Friday.

LME lead prices
SHFE lead prices
physical lead prices

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