SMM Lead Market Morning Review (2014-6-9)

SHANGHAI, Jun. 9 (SMM) – LME lead prices started last Friday at USD 2,102/mt in the Asian trading session, and later fell to a trough of USD 2,084/mt. During US trading hours, the metal rallied to as high as USD 2,124.8/mt due to positive US nonfarm payroll figures, and closed up USD 5.8/mt at USD 2,109.8/mt. Traded volumes gained by 1,019 lots to 4,741 lots, while positions added by 1,251 lots to 131,368 lots. LME lead inventories increased by 1,000 t to 191,375 mt.

Last Friday, the US nonfarm payroll figure beat expectations, rising by 217,000, and the unemployment rate remained at its lowest since September 2008 of 6.3%, hovering below 7% for seven months in a row. These upbeat economic reports gave a fillip to market confidence, driving US stock prices up. Commodity market also gained traction to rally. The rating agency Standard & Poor’s announced that it may raise the long-term rating for the US to “AAA” if it sees “additional evidence of bipartisan efforts that signal a lower degree of political brinksmanship around fiscal policy decisions, coupled with a general government debt burden decline more pronounced than we currently expect.” Meanwhile, the US consumer credit increased by USD 26.85 billion in April, up 10.2% YoY, the fastest growth since July 2011.

In China, the General Administration of Customs reported that the country’s trade surplus rose for a third month straight in May to USD 35.92 billion. Exports rose, but imports staged an unexpected drop, in a sign of sluggish demand from domestic markets. China imported 380,000 mt of copper and copper semis in May, down 15.6% from April, but up 5.9% from a year ago.

Encouraging US nonfarm payroll figures and China’s exports for May should boost base metals markets as a whole on Monday. LME lead prices should move between USD 2,100-2,120/mt, while the most active SHFE 1408 lead contract is set to fluctuate between RMB 14,000-14,100/mt. In China’s physical lead markets, traded prices should be largely in the RMB 13,850-14,000/mt range on Monday.