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SMM Lead Market Morning Review (2014-6-10)
Jun 10,2014 10:17CST
price review forecast
LME lead prices are set to move between USD 2,120-2,150/mt, while the most active SHFE 1408 lead contract is forecast to hover between RMB 14,000-14,100/mt.

SHANGHAI, Jun. 10 (SMM) – LME lead prices overnight initially dipped to USD 2,099/mt after starting at USD 2,111/mt in Asian trading hours, but rebounded subsequently to end up USD 32.5/mt, or 1.54%, at USD 2,142.3/mt. Traded volumes gained 531 lots to 5,272 lots, while positions shed 2,741 lots to 128,627 lots. Meanwhile, LME lead inventories lost 600 mt to 190,775 mt.

The most active SHFE 1408 lead contract advanced to a high of RMB 14,480/mt after opening Monday’s night session at RMB 14,100/mt, but later fell to close up RMB 50/mt at RMB 14,060/mt. During the night session, traded volumes for the most active contract totaled 322 lots, while positions gained 128 lots to 5,384 lots.

The Dagang Bonded Warehouse at the port of Qingdao has reportedly been closed by the authorities on Monday, with deliveries of metals suspended there. The ongoing probe into copper, aluminum, and alumina fraudulent financing has spread to ports in Shanghai and other regions. Meanwhile, copper shipments at the port of Qingdao are likely to be transferred to LME warehouses with stricter regulations since banks and traders are concerned with financing risks for the relevant metals. This could accordingly inflate apparent copper inventories, which will weigh down copper prices.

The People’s Bank of China (PBOC) announced late Monday that it would reduce the “required reserve ratio” by 0.5% for banks that mainly lend to small businesses and rural borrowers since June 16. The central bank also lowered the ratio by 0.5 percentage points for finance companies, financial leasing companies, and auto financing companies to improve their capital utilization efficiency and boost consumption. These moves follow a similar step in late April, when the PBOC cut required reserves for county-level commercial banks and rural credit co-operatives by 2 percentage points and 0.5 percentage points, respectively. Meanwhile, the China Securities Regulatory Commission released the 35th list of another 11 companies which have disclosed their IPO plans, with the total reaching 466.

The US dollar index rose 0.24%, while the euro eased 0.35% against the US dollar. Major world stock indices ended higher across the board. LME base metals closed with gains, except for copper.

The reserve requirement ratio cut by the PBOC is expected to give a limited boost to base metals markets, while China’s PPI should come in positive on Tuesday. In this context, LME lead prices are set to move between USD 2,120-2,150/mt, while the most active SHFE 1408 lead contract is forecast to hover between RMB 14,000-14,100/mt. In China’s physical lead markets, traded prices should be in the RMB 13,900-14,000/mt range on Tuesday.


LME lead prices
SHFE lead prices
physical lead prices

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